China big tech’s “new normal” is no “Wild West” and those days are never coming back with the launch of China’s new “State Anti-Monopoly Bureau.”
In this interview on CGTN Europe I talk about the goals of China’s new Anti-Monopoly Bureau which has now been upgraded to “Deputy Ministerial” status to ensure that it is taken seriously.
Many observing China’s internet regulations from afar are asking “when will this end?” I think the answer is clear by now, it won’t.
I don’t think that means we will see regulatory actions of the same intensity we’ve seen this past year, continued indefinitely. What it does indicate is that we’re looking at a “new normal.”
There are a lot of theories as to why China is hammering its internet companies. The paranoid offer answers that range from a government take-over of big tech to a vendetta by the government against China’s newly wealthy. Neither really stands up to critical assessment but makes for entertaining reading.
What’s really behind it all is China’s reliance on innovation for continued growth. Without it, China is dead in the water.
If you read the gov’t’s stream of press releases you’ll see the word “innovation” and “fair” repeated fairly regularly. There’s a good reason why. China’s GDP and its societal “digital transformation” are depending on continued innovation in the tech sector and monopolies won’t allow this to occur especially if they are “unfair.”
In case you’re in doubt, look no further than the US’s big tech to see how it’s done. From the purchase of WhatsApp by Facebook to Google scouring Silicon Valley for the latest high tech, it’s getting harder and harder for tech to break out in the US without being consumed by a tech giant.
Are they fair? Look to the spate of lawsuits against them for your answer. This is precisely the kind of innovation killing China hopes to avoid.
How many new BigTechs has the US spawned in the last 5 years? For comparison look at China’s Douyin (TikTok) it is now among China’s tech giants and 5 years ago was nothing. Is there anything similar in the US, other than TikTok? I’m sure some will disagree and I look forward to your comments.
Will foreign investors go elsewhere? Maybe, this week the Paytm IPO was heralded by many in the press as India taking over as “the new China.” After tanking 27% today’s press seems to question whether burying China was premature.
Meanwhile, there is ample evidence that foreign investment is still pouring into China. This week hedge fund manager Ray Dalio announced raising nearly US$500 million for a new China fund.
I get it, foreign investors have every right to be wary, but at least some are willing to test the “new normal.”
