Chinese President Xi Jinping
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Guangzhou, China — An expert told CNBC that China’s recent regulatory oversight of large technology giants is part of its broader effort to become a technology “superpower”.
Like the United States and the European Union, China is studying how to regulate technology in many fields, from data protection to antitrust. China’s technology companies have grown, largely free from regulations, and have become one of the largest technology companies in the world.
And there are many regulations that have come into effect or are under development.
In November, the Central Bank of China and regulators issued draft rules on microfinance, which included regulations such as capital requirements for technology companies that provide loans.
Last month, SAMR stated that it had begun an investigation into Alibaba’s monopoly practices.
In October, China issued a draft personal data protection law aimed at regulating how companies handle user data.
Kendra Schaefer, a partner of Trivium China, a Beijing research firm, said that all these regulations are part of China’s greater efforts to become a major technological power in the world.
Schaefer told CNBC’s “Beyond the Valley” podcast: “Below all these things, I think China knows that if it is to become a technological superpower… then it must lay a solid regulatory foundation.”
“It must lay the foundation in a way that regulates company operations, but it must also be based on data. In fact, data may be the most important regulation it must make.”
“All of these are the foundation. This is actually just to establish a framework and a springboard from which China can develop and move forward faster.”
Beijing seems to have taken a tougher stance against Chinese technology companies recently. In November, regulators forced Alibaba’s financial arm, Ant Group, to suspend what was originally the world’s largest initial public offering (IPO) plan, while the company is dealing with regulatory changes. Last month, Alibaba and two other companies were fined for failing to make appropriate announcements to the authorities about past acquisitions.
Emily de La Bruyere, co-founder of the consulting firm Horizon Advisory, said this does not mean that Beijing is opposing its technology champion.
“These multinational technology companies are undoubtedly the driving force used by China to expand its information and standards strategy on a global scale. This will not change. We will not see Beijing opening up its big technology in a high-tech way like Washington does.” Tell CNBC via email.
“However, Beijing will ensure that its big technology acts in accordance with its rules and regulations, connects to the platform and serves the strategy.”
US, EU technical regulations
It is not just China that has brought about a comprehensive change in technical regulations. The European Union is perhaps the most active region in the world on this issue. Its landmark General Data Protection Regulation was approved in 2016 to introduce rules on how to handle user data.
In December last year, the European Union introduced the “Digital Market Law” and the “Digital Services Law”, aimed at tightening control over the behavior of technology giants in many fields.
However, the United States has not adopted a similar approach, enacting extensive legislation around data and other fields.
Schaefer of Trivium China said: “We do not have very good data regulations in the United States.” Into the company.”
“I think we don’t have a basic data policy. This is one of the reasons why we use this weird decentralized method to try to control incoming Chinese apps like TikTok. It targets specific Chinese companies because we don’t have a unified Regulations.”
Schaefer was referring to the ongoing legend in Washington, trying to get the Chinese company ByteDance to sell TikTok’s US operations.