Chinese President Xi Jinping speaks at the opening session of the 20th Communist Party of China Congress at the Great Hall of the People in Beijing on October 16, 2022.
Noel Celis | AFP | beautiful pictures
Chinese tech shares rose on Monday after a political reshuffle in the world’s second-largest economy tightened the chairman’s Xi Jinping gripping power with investors fearing this could be a negative for private companies.
Tech giants Alibaba and Tencent closed down more than 11% in Asia; search company Baidu 12% lower while the food delivery company Meituan increased by more than 14%.
The moves come later The episode paved the way for an unprecedented third leadership term and focused on the Politburo standing committee, the core power circle of the ruling Communist Party of China, with loyalists.
That leaves no one daring to challenge any “policy blunders” that Mr. Xi makes possible, said Xin Sun, senior lecturer in Chinese and East Asian business at King’s College London. hinder the growth of the technology sector.
“Now that the new Politburo Standing Committee is full of choices made by Mr. Xi himself and those on the opposing side… are all out, it’s clear that no other political class dares to challenge it. his policy mistakes or even a slight deviation from his preferred policy agenda, of course the past few years have focused on favoring the public sector at the expense of the public sector. private sector,” Sun told CNBC by email.
“Therefore, these policies are unlikely to be reversed or adjusted, leading to an extremely bleak economic outlook.”
Under Mr. Xi’s leadership, China has implemented a series of policies to tighten regulation of the technology sector in areas ranging from data protection to regulate the way that algorithms can be used.
Meanwhile, Mr. Xi has stuck with the strict “zero-Covid” policy that has kept cities, including financial giant Shanghai, closed this year, even as most The world has opened up their economies.
These two policies have contributed to billions of dollars being wiped off the value of Chinese companies and tech giants, including Tencent and Alibaba. slowest growth in history this year.
“Tech stocks have never been Xi’s best friend and clearly the market thinks the purge will continue,” Justin Tang, head of Asia research at United First Partners, told Reuters. CNBC.
As part of a leadership reshuffle in China, Shanghai party secretary Li Qiang is expected to become prime minister next year. Li oversaw the lockdown and “zero-Covid” approach in Shanghai this year. His absence from the position of deputy prime minister marks a break with the long tradition of the Communist Party. Li will replace outgoing Premier Li Keqiang, an official seen as pro-business.
Sun said the new leadership is largely made up of party officials “with limited experience or a credible track record in economic management,” marking another reason investors are concerned about the future.
“A rigid political regime with a limited ability to correct many policy mistakes, a lack of competent and experienced economic policymakers, and growing geopolitical risks, all All under the leadership of a single person whose track record proves unfriendly to the private sector.” Sun said, explaining the negative market sentiment on Chinese tech stocks.
However, not all analysts are concerned about further regulatory tightening. In recent months, Beijing has taken less harsh regulatory actions against tech giants, prompting some commentators to suggest the government takes a softer stance on internet companies. .
Duncan Wrigley, chief China economist at Pantheon Macroeconomics, told CNBC: “Some policy on tech stocks has softened.
“Overall, I think the positions of leadership and governments have become more balanced and positive over the past year.”
