Large part of China’s technology regulation to become ‘superpower’

Chinese President Xi Jinping

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GUANGZHOU, China – China’s recent moves are part of its broader push to become a technological “superpower” to regulate big technology giants, an expert told CNBC.

Like the US and the European Union, China is working on how to regulate the tech sector in many areas, from data security to antitrust. China’s technology companies have largely been unaffected by regulation, and have become the largest in the world.

And there are many rules that have come into effect or are in action.

In November, China’s central bank and regulators issued draft regulations on so-called microlending, which included provisions such as capital requirements for technology companies offering loans.

The State Administration of China for Market Regulation (SAMR) has also published draft rules looking to prevent monopoly practices by Internet platforms. It is one of the most comprehensive comprehensive proposals in China for regulating large tech companies.

Last month, SAMR said it had begun an investigation on Alibaba over monopoly practices.

And in October, China released a draft personal data protection law aimed at how companies would process user data.

According to Center Shaffer, a partner of Beijing-based research firm Trinium China, all these rules are part of China’s greater effort to become a major global technological force.

“Beneath all the stuff I think China understands that if it is going to become a technological superpower … it needs to lay a solid regulatory foundation,” Scheffer told CNBC’s “Beyond the Valley” podcast.

“It is to lay the foundation in the way it controls a company’s operations, but it also has to lay that foundation in terms of data. In fact, data may be the most important rule it has got for laying. “

“All these things are fundamental and this is really just the setting of a framework, a springboard from which China can develop and move faster.”

Beijing seems to have recently taken a tough stance against the country’s technology companies. In November, regulators forced Alibaba’s finance-linked Ant Group to suspend plans for the world’s largest public offering (IPO), while the company dealt with regulatory changes. Last month, Alibaba and two other firms were fined for not making a proper announcement to authorities about previous acquisitions.

But this does not mean that Beijing is working in opposition to its tech champion, according to Emily de la Bruyère, co-founder of consultancy Horizon Advisory.

“These multinational tech companies are definitely force enablers that China uses to expand its information and standards strategy globally. This is not going to change. We are not going to see Beijing see its Big Tech The way Washington appears, “Brewer told CNBC via email.

“But, Beijing is going to make sure that Big Tech works with its rules and regulations, is connected to its platforms, and serves its strategies.”

US, EU Technique Regulation

China is not the one to bring about a massive change in technology regulation. The European Union has been perhaps the most aggressive region in the world on this issue. In 2016 its Landmark General Data Protection Regulation was approved, which sought to bring rules about how to process user data.

And in December, the European Union introduced the Digital Markets Act and the Digital Services Act, which aims to bring stricter controls on the behavior of tech giants in many areas.

But the US still has to take a similar approach with broader legislation in areas such as data.

“We don’t have good data regulation in the US yet,” said Shaffer of Trivium China. “So we don’t have that basis, such basic fundamentals, on which we can regulate our domestic companies as well as foreign inward companies.”

“I think we don’t have that basic data policy is one of the reasons we’re taking this bizarre scattershot approach, like trying to control incoming Chinese apps, such as targeting specific Chinese companies , Because we do not have universal regulation. “

Shaffer was referring to Washington’s ongoing saga to try to get Chinese company ByteDance to sell Teaktok’s US operations.


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