China has signaled easing of its tech crackdown — but don’t expect a policy U-turn

The technology sector has been a focus of the Chinese government and has wiped billions of dollars of value from the companies.

Beijing's recent positive rhetoric should not be seen as a reversal of policy, analysts said.

The big tech companies will have a grace period for the next six months, according to a tech analyst.

The long-term outlook hasn't changed despite this being a really not a U-turn on the tech crackdown. He said that Beijing has come to the conclusion that it is a bad idea to let big tech companies run wild because it creates unfair market competition.

The tech crackdown are here to stay for a long time.

Beijing has been trying to rein in the power of some of its biggest companies by introducing stricter regulation on its domestic technology sector.

Since late 2020, China has increased scrutiny on the technology sector and introduced a slew of new regulation that has tried to rein in the power of its domestic giants. Analysts say that while there appears to be sign of this crackdown easing, there will not be a complete U-turn in policy.

In the past 16 months, rules in antitrust, data protection, and other areas have come into effect. The moves have caught international investors off guard and caused a huge sell-off in the stocks of domestic giants.

Beijing has signaled that it may ease scrutiny on the tech sector as it faces pressure from a resurgence of Covid.

On Tuesday, Chinese officials met with some of the country's top technology executives.

China's Vice-premier promised support for the technology sector and plans for internet companies to go public.

The Politburo is a top decision making body in China. The Politburo pledged to support the development of the platform economy, which includes internet companies in areas from social media to e- commerce.

Even if there are some reversals, it may be too late to reverse the damage.

There will be no huge shift in policy despite the soothing tones from Beijing.

I don't think the regulatory actions will stop. Charles Mok, a visiting scholar at the Global Digital Policy Incubator, said that various ministries still have a mandate to enforce the amended and strengthened regulations.

It may be too late to reverse the damage if there are some reversals. Even if they allow more listings overseas, the investor confidence is already lost, and the scrutiny and hostility from the foreign market cannot be reversed.

It will be difficult to make a U-turn because the regulatory scrutiny has been driven by the top of China's political hierarchy.

This seems very similar to the debacles they are facing. You know it's wrong, but you can't reverse course, and you have to pay lip service to hope for the best.

Zero Covid is China's policy of eliminating the coronaviruses from the mainland through tough measures. The financial and economic powerhouse city of Shanghai has been locked down since late March. China has a zero Covid policy.

Mok said that the reasons behind China's regulatory tightening have not changed.

There is no way that the campaign to increase state control of the digital economy and all the data in the trade was motivated by that.