The Chinese government has sent a fresh signal that it intends to support Big Tech firms and their internet platforms amid gathering economic headwinds, underlining a change in tone after months of tighter regulatory scrutiny.
According to the official readout of a State Council meeting chaired by Premier Li Keqiang on Wednesday, China will roll out measures “to support development and investment by private businesses and to promote the healthy and sustainable development of platform economies”, reiterating a more supportive tone going back to March, when Vice-Premier Liu He vowed to support Big Tech.
The positive message boosted investor morale in Hong Kong despite no further details about the measures Beijing intends to implement. Tech stocks rallied, with Alibaba Group Holding, which owns the South China Morning Post, closing almost 9 per cent higher in Hong Kong, while Meituan rose 8 per cent.
The promise of more support comes after both Alibaba and internet giant Tencent Holdings have cut thousands of jobs this year amid a gathering economic slowdown.
China’s economy has been hit by strict Covid-19 lockdown measures, Russia’s war in Ukraine, supply chain disruption and slowing global growth. The tech sector has also endured waves of new regulations, after Beijing moved to clip Big Tech’s wings in late 2020.
Alibaba, which paid a record US$2.8 billion fine a year ago after being found to be in violation of China’s antitrust laws, reported a 50 per cent fall in net income for the June quarter while sales came in flat at 205.56 billion yuan (US$29.95 billion).
However, there are signs that some sectors of the new economy are alive and well. For the 100 merchants showcased at this week’s Taobao Maker Festival in Guangzhou, an annual event hosted by Alibaba for young merchants to promote their creativity, the key to their future is the ability to generate new consumer demand.
Lu Bin, a Tsinghua University graduate who created a realitic toy pets start-up, said he quit his job at FAW-Volkswagen Automobile to start his business in 2019 after seeing a friend who was heartbroken over the death of his pet dog.
“I started to wonder if anyone could make these [realistic toy pets],” he said. “The pet market has been proven to be very big … But many people can’t raise pets for different reasons. For example, students may not be able to have a pet when they are living in a dormitory and some people may be allergic to cat hair.”
Lu said that in spite of the harsh economic situation and overall weak consumption, his business is doing fine, although “we are still at an early stage”.
Many of the merchants at the Taobao event are focused on niche markets. One merchant showcased sophisticated keyboards with price tags above 10,000 yuan (US$1,500), while another promoted robots that can serve as home teachers.
Zhao Shuang, business director of the consumer robot maker Beijing KEYi Technology, said his company initially targeted US and European markets before entering the domestic market last year to tap Chinese parents that want their kids to learn coding. Zhao said the aim of his robots is to build a “coding mindset” in kids. South China Morning Post