Tencent and Alibaba's shares rise as China's state planner acknowledges their contributions to tech innovation
Tencent, Alibaba
China's state planner on Wednesday released a statement praising Tencent and Alibaba for their contributions to the technology sector. This marks a significant shift in the government's stance towards the industry following a three-year crackdown.
What China's state planner said
According to China's National Development and Reform Commission (NDRC), Tencent and Alibaba have become key players in areas of tech innovation that China is prioritising, such as semiconductors and autonomous driving.
The commission highlighted specific examples, including Tencent's investments in cloud computing and Meituan's investments in semiconductors. Alibaba's efforts in digitising agriculture were also mentioned.
These comments from the NDRC come after authorities indicated last week that the crackdown on the technology sector, which began in late 2020, has come to an end. As per AFP, the campaign's end was marked by fines that were imposed on Ant Group and Tencent.
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How the praise impacted the tech companies
Following the announcement, Tencent's shares rose by 1.8 per cent and Alibaba's shares jumped by 1.86 per cent in the Hong Kong market, outperforming the benchmark Hang Seng Index, which saw a 1.15 per cent gain.
This shift in tone from Beijing as per AFP reflects a broader effort to support the private sector and stimulate China's economy in the aftermath of the COVID-19 pandemic. The NDRC has also been engaging with other private firms, including Baidu, in recent weeks.
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Chinese President Xi Jinping has emphasised the importance of focusing on "hard" technologies like semiconductors and artificial intelligence, urging the country to reduce its reliance on Western technology. This also aligns with China's goal of achieving technological breakthroughs and maintaining its competitiveness in the global tech industry.
China's crackdown on technology sector
As per AFP, the crackdown had significantly impacted the market value of China's top technology firms. Billions of dollars were wiped off the market value of the companies, which were punished for violations that ranged from failing to protect customer privacy to monopolistic behaviour.
Mint reports that the regulatory crackdown on Beijing's tech firms gained momentum after Alibaba affiliate Ant Group's $37 billion initial public offering (IPO) was shelved in November 2020, which also marked the beginning of a broader crackdown on mainland China's rapidly expanding and influential tech companies.
Data from Refinitiv shows that over two years, the crackdown cost China's major tech companies over $1 trillion in value. This staggering figure is equivalent to Netherland's economy.
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