China’s erratic regulatory moves against Big Tech firms must end, says communist party newspaper after video gaming stock rout
- The mouthpiece of the Central Party School argued that regulators must stop the practice of swinging between extremes of lax oversight and ‘overly strict’ regulation
- The opinion came days after the NPPA wiped out billions of dollars in value from Chinese gaming stocks with draft regulation to restrict spending on video games
A Chinese Communist Party newspaper has urged the country’s regulators to end their erratic moves against the platform economy, in a sign of growing concern over policy damage to the health of the country’s ailing internet titans.
A front page opinion piece published by the Study Times, the mouthpiece of the Central Party School, on Wednesday argued that regulators must stop the practice of swinging between extremes of lax oversight and “overly strict” regulation so that China’s Big Tech firms can have room to grow.
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The draft proposal is the latest example of regulatory hostility, after Beijing’s campaign of “curbing irrational expansion of capital” in 2020 unleashed a race among different ministries and watchdogs to claim authority in checking and approving internet businesses.
A long list of Chinese ministries has been sharpening their teeth when it comes to disciplining internet firms. The Cyberspace Administration of China, the country’s internet watchdog, for instance, has articulated Beijing’s demand for data security into intrusive requirements that have made it increasingly difficult and costly to comply with.
Beijing’s pursuit of market control, along with China’s economic slowdown and rising geopolitical tensions with the US, have turned Chinese internet stocks into one of the worst-performing assets in the past three years. Tencent Holdings, the country’s most valuable player that once eyed being Asia’s first US$1 trillion company, fell out of the global top 10 after losing 60 per cent of its market capitalisation, while Post owner Alibaba Group Holding, which exceeded Amazon.com in market value in 2014, is now worth an eighth of the US e-commerce titan.
According to the Study Times opinion piece, the erratic regulatory behaviour is “a risk and a challenge” for China as its leading internet firms are left further behind their global peers in terms of competitiveness and growth potential.
China must improve “cross-departmental coordination” to avoid duplicated enforcement and checks, while regulatory acts and policy adjustments must factor in “the views of all parties, especially those being regulated” to avoid interrupting normal business activities or causing unexpected risks, it said.
Chinese regulators should loosen their grip and allow “self-governance” by Chinese internet companies, it added. “It is important to respect the rationality and necessity of platform self-governance to guide and encourage the formation of self-regulatory mechanisms,” the article said.
It remains unknown whether China’s different regulators will heed the advice. Beijing’s regulatory crackdown on the internet sector officially came to an end a year ago, when the Chinese leadership said the country’s platform enterprises would be encouraged to “fully display their capabilities” in growth, job creation and international competition.
