China gathers private sector firms as markets consider crackdown

(Bloomberg) — China’s top political advisory body plans to host a forum next week with some of the country’s largest private sector companies including Baidu, an event that will come under close scrutiny by investors debating whether Beijing will review the crackdown. technology industry.

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The Chinese People’s Political Consultative Conference aims to host the symposium next week with officials from government agencies such as the China Cyberspace Administration and business executives including Baidu founder Robin Li, said people familiar with the matter said. The people, who asked not to be identified while discussing a private matter, said Vice Premier Liu He, chief economic aide to President Xi Jinping, may also attend.

While the conference focuses on the broader topic of developing China’s digital economy, investors will likely be watching for signs whether Beijing intends to end its year-long crackdown on the tech sector. Xi’s administration is enlisting industry – the biggest growth engine of the past decade – to revitalize an economy plagued by rolling urban shutdowns, supply chain bottlenecks, and evaporating consumption.

Shares in heavy sector sectors Baidu, Tencent Holdings Limited and Alibaba Group Holdings Limited trimmed their losses earlier Thursday morning in Hong Kong.

Sentiment toward the industry has swung wildly in recent weeks, with companies from Tencent to Jack Ma’s Alibaba climbing on April 29 after China’s top leaders issued a comprehensive set of pledges to boost economic stimulus. Later that day, the South China Morning Post and the Wall Street Journal reported that the government was organizing a symposium – originally scheduled for earlier this month – to signal the waning pace of Beijing’s crackdown. This rally proved short-lived, in part due to the lack of concrete measures to support a sector losing more than $1 trillion in value. On Wednesday, technology companies led a rally in the Chinese stock market.

In April, the Chinese People’s Political Consultative Conference held a video meeting with companies in the eastern Chinese city of Hangzhou at the heart of the country’s private sector expansion, including Hangzhou Hikvision Digital Technology, a CCTV maker, as part of a series of preparations for a national conference. Due in May, the agency’s official newspaper said at the time.

The people said it was unclear if next week’s forum would trigger policy changes or easing. The timing could change, too, given the difficulty of organizing a major conference as cities from Beijing to Shanghai struggle with shifting Covid lockdowns. Delegates will attend physically as well as in person, depending on the role and location. Baidu representatives did not respond to requests for comment, while calls to the CPPCC news desk were not answered.

The Chinese People’s Political Consultative Conference, with more than 2,000 members of the country’s most prominent politicians and businessmen such as Lee, exists primarily to debate, advise on, and support policies and legislation, or as a voice board for the nation’s leaders. Its members meet at least once a year and constantly echo the nation’s top priorities, from population growth in 2021 to systemic financial risk in 2018.

Beijing has now made stability a top priority in a year of global geopolitical and economic uncertainty — particularly as its top officials prepare to effect a major leadership transition by the end of 2022. Already in March, China pledged to ease its regulatory offensive, as part of efforts to stabilize The turbulent financial markets are stimulating the economy.

This has fueled expectations that the campaign — which began with the dramatic cancellation of Ant Group Co.’s record IPO before spiraling into an attack on every corner of China’s tech field — has come to an end, or at least is shifting onto a more sustainable path. Speed.

This will be good news after the turbulent year of 2021, when Beijing limited playing time for minors, banned profits in large sections of the online education sector, and forced companies from Alibaba and Meituan into Didi Global Inc. The wheel-free industry is in disarray.

But investors remain cautious as they weigh a mixed bag of developments, including game re-approvals and a campaign to rein in the poorly understood algorithms internet companies use to serve content and collect data. The Hang Seng tech index is up 37% this year since its low in mid-March, before giving up most of those gains in the past weeks.

(Updates with post action from fourth paragraph)

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