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Chinese policy and policy updates
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China has released a five-year plan to strengthen regulatory control over strategic sectors, including technology and healthcare, as part of Beijing’s latest attempt to assert Communist Party supremacy over the world’s second-largest economy.
The Communist Party Central Committee and the State Council, or cabinet, on Wednesday evening released a high-level policy document that would expand government legislation and create a modern regulatory environment to “meet the ever-increasing demands of the people for a good life “.
The plan’s release follows a series of regulatory measures that stunned investors in Chinese companies and brought down tens of billions of dollars in the valuations of some of the country’s biggest tech groups.
Beijing appeared to use the statement as an offer to provide guidance on the scope and duration of its regulatory overhaul, even though the sweeping document did not provide a list of specific instructions or measures. But analysts said the crackdown would intensify.
“Regulatory agencies in China will continue to scrutinize companies in the internet and tech industries on a range of issues, such as overseas listings, data security, consumer privacy, anti-competitive practices and legal irregularities. fusion matter, ”said Bruce Pang, head of research. at China Renaissance, the investment bank.
The sweeping document underscored the “urgent need” for additional legislation to govern technological education sectors and address antitrust issues critical to improving people’s livelihoods.
Timely research must be done to establish legal frameworks for the digital economy, internet finance, artificial intelligence, big data and cloud computing to ensure that “new business models develop in healthy ways” , added the plan.
But Pang said China’s tech sector will continue to come under pressure over a series of socio-economic challenges that Beijing says need to be addressed.
“We anticipate a short-term disruption in market sentiment and pressure on the valuations of overseas-listed Chinese companies in related sectors, amid the risk of regulatory overshoot,” he said.
“Policymakers want to address and solve social problems effectively and efficiently to ensure social equity, justice, equality and national security as well as to prevent risks. “
In recent weeks, various Chinese regulators have unveiled a wide range of rules aimed at imposing limits on many industries and businesses in the name of protecting national security and social stability.
The Ministry of Industry and Information Technology released a final version of its guidelines for smart cars on Thursday. The rules required companies seeking to export user or vehicle data to first undergo a data security review by regulators. Approval would also be required before upgrading the autonomous vehicle driving software.
The China Banking and Insurance Regulatory Commission, the banking and insurance regulator, also unveiled a plan to reform the country’s online insurance industry.
Businesses and industry intermediaries have been ordered to correct a number of issues, including customer data security practices, marketing and fees, according to a notice seen by the Financial Times. The regulator called it an important political commitment and said it would step up inspections.
Stocks in China were broadly down on Thursday after the announcement, with the Hang Seng Tech Index in Hong Kong falling around 1%.
Thomas Gatley, a Beijing-based analyst at Gavekal Dragonomics, a research group, said the pace and severity of sudden regulatory interventions would likely be moderate, but the Beijing campaign would be “absolutely not without hiccups.”
Gatley said the reforms would fall into two broad categories: information control and “common prosperity guidelines,” or ways to “deal with middle-class people in both their role as consumers and in their role as workers ”.
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