Chinese regulators are reportedly planning to suspend their campaign against the tech giants as the country’s economic growth slows, according to the Wall Street Journal.
The WSJ reports that China’s top internet watchdog is slated to hold talks with the country’s technology companies to discuss the regulations, which could indicate that the government has acknowledged that its strict regulations have weighed on the private sector amid a gloomy economic outlook.
Shares of US-listed Chinese companies soared on the report. Alibaba (NYSE:BABA) stock price is up over 12%, Bilibili (NASDAQ:BILI) has gained 15.7% while Pinduoduo (NASDAQ:PDD) is trading 15.9% in the green.
The officials have reportedly decided to hold off on the new regulations that put restrictions on how much time young people spend using mobile apps. Moreover, the report also said that the government could demand from some of the tech giants to offer 1% of their equity stakes to the state and allow the government to have a hand in corporate decisions.
Beijing has already taken similar steps in managing internet companies in China including TikTok owner ByteDance and Weibo Corp. (NASDAQ:WB).The government now considers expanding the measures to other tech corporations such as Tencent (OTC:TCEHY) and Meituan (OTC:MPNGY).
The potential ease of regulations at the upcoming meeting would emphasize the importance of economic stability in China amid a period of a growth slowdown.
Pausing the regulatory campaign and showing support for the country’s tech giants could help prop up China’s economy after many have predicted slower growth this year due to the spread of the Omicron variant, which has resulted in lockdowns.
At the last meeting of the Politburo on Friday, Chinese leader Xi Jinping and other Communist Party representatives said they would complete the crackdown against internet companies in the country, though they did not provide a concrete timeline.
By Senad Karaahmetovic