China’s grand plan to boost domestic demand is set to revive Big Tech firms after crackdown
- China’s new guideline, which emphasises domestic demand, has promised support for internet-enabled services such as the sharing economy and e-commerce
- Support for new areas of consumption bodes well for sectors such as consumer electronics, video gaming and virtual reality, according to analysts
China’s grand plan to expand domestic consumer demand for the coming 13 years is set to give the country’s internet platforms a shot in the arm, as technology becomes increasingly central to Chinese society and the daily lives of its citizens.
The 22,000-character strategic report, jointly published on Wednesday by the central leadership of the Chinese Communist Party and the country’s cabinet, devoted many paragraphs to “new types of consumption” and pledged support for internet-enabled services, a sector mostly controlled by Big Tech companies.
E-commerce, for instance, is dominated by Alibaba Group Holding – owner of the South China Morning Post – along with JD.com and Pinduoduo, while the on-demand delivery services sector is led by Meituan. Tencent Holdings, ByteDance and Kuaishou Technology, meanwhile, hold a tight grip on huge swathes of China’s online entertainment market, which includes video gaming and short videos.
According to the new official document, China aims to encourage the development of online entertainment and healthcare, and support autonomous driving and autonomous delivery services.
Development in live-streaming e-commerce and the sharing economy, encompassing transport, accommodation and travel, will also be encouraged, the document said. In China, Didi Chuxing, which was fined US$1.2 billion by Beijing in July over data violations, remains the largest player in the ride-hailing market.
Even online learning services, which have suffered from a crackdown against private tutoring for schoolchildren since last summer, received friendly mention in the guideline.
The wording chosen this time by Chinese policymakers, after a fall of more than US$1 trillion in market value due to a regulatory clampdown on the country’s Big Tech firm for over a year since late 2020, shows that authorities recognise the role of the internet industry in boosting consumer spending, analysts said.
Support for new consumption bodes well for sectors such as consumer electronics, video gaming and virtual reality, according to a research note by analysts at Xian-based Western Securities.