China’s Regulatory Enforcement Summary: From Bitcoin to Celebrity Fan Clubs – Nothing is Off the Table

China has launched a multifaceted crackdown on its tech companies, leaving startups and decades-old companies operating in a new and uncertain environment.

Here are the sectors that are facing regulatory pressure:

game companies

Chinese regulators have reduced the amount of time players under 18 can spend online gaming to one hour of gaming on Fridays, weekends and holidays, in response to growing concerns about gambling addiction, media said. on Monday.

Technology companies eyeing IPOs

China is establishing rules to ban Internet companies whose data poses potential security risks from being listed outside the country, including in the United States, according to a person familiar with the matter.

The ban must also be imposed on companies involved in ideological issues, said the source, who declined to be identified because the matter is private.

Cloud computing

China is building its own state-backed cloud system, “guo zi yun,” which translates to “cloud of state assets,” in a direct threat to tech giants like Alibaba, Huawei and Tencent Holdings.

The Chinese city of Tianjin has asked county-controlled companies to migrate their data from private-sector operators like Alibaba Group and Tencent Holdings to a state-backed cloud system next year, according to a document seen by Reuters.

Platform economy

China is trying to increase oversight of the algorithms that tech companies, including e-commerce companies and social media platforms, use to reach users.

China’s Cyberspace Administration said in a statement on Friday that companies must respect business ethics and fairness principles and must not create algorithmic models that induce users to spend large amounts of money or spend it on a in a way that might disturb public order.

In April, the State Administration for Market Regulation imposed a record fine of $2.75 billion (approximately Rs. 20,140 crores) on Alibaba for engaging in the practice of “picking one out of two”, in which an e-platform commere prevents sellers from selling. rival sites.

The regulator also imposed fines on smaller companies for other practices related to consumer and labor rights.

In May, it fined rival JD.com CNY 300,000 (about Rs. 34 lakhs) for promoting false information about its food products.

The regulator also ordered China’s food delivery companies to provide better protection for workers.

celebrity fan clubs

China cracked down on what it described as a “chaotic” celebrity fan culture on Friday, barring platforms from publishing popularity lists and regulating the sale of fan merchandise after a series of controversies involving artists.

education

Beijing has introduced regulations that prohibit private for-profit companies from raising capital abroad.

The rules also say that tutoring centers must register as nonprofit organizations, cannot offer programs for subjects already taught in public schools, and prohibit classes on weekends and holidays.

A competitive system of higher education has made tutoring services extremely popular with parents, but the government has recently sought to reduce the cost of parenting in an effort to raise the lagging birthrate.

online finance

In November, just before the Ant Group entered the list of what would have been a record share sale, China’s banking regulators issued draft rules calling for tighter control of online lending, in which Ant was a major player.

The regulations set limits on online lending between provinces and limited lending to individuals.

The next day, the People’s Bank of China suspended the Ant Group’s initial public offering. In April, the regulator asked Ant to separate its payments business from its personal finance business.

Salutation

In June, China’s Cyberspace Administration told the company Didi Chuxing to stop accepting new users, just days after going public on the New York Stock Exchange.

That move dropped about a fifth of the company’s share price.

Analysts and investors say the moves on Didi have more to do with big data and overseas listings by Chinese companies than with competitive practices.

The regulator initially cited consumer privacy violations, but later issued a separate set of regulatory bills for data-rich Chinese companies to conduct a security review before listing overseas.

At the time of the CAC’s investigation, China’s market regulator forced Didi and other companies to pay fines of CNY 500,000 (about Rs. 56.6 lakhs) for failing to report acquisitions of smaller companies.

Bitcoin

In May, three financial regulators tightened restrictions on China’s cryptocurrency industry, preventing banks and online payment companies from using cryptocurrencies for payments or settlement.

They also banned institutions from providing exchange services between cryptocurrencies and fiat currencies, and banned fund managers from investing in cryptocurrencies as assets.

In the following weeks, measures emerged from provincial governments to restrict Bitcoin mining. Bitcoin price in India was at Rs. 37.3 lakhs from 6pm IST on August 30th.

These restrictions have triggered a wave of mining closures across the country, with the state tabloid Global Times estimating that 90% of mining operations would close in the short term.

Property

China’s Ministry of Housing and seven other regulators told the property management sector to “improve order”.

With China’s economy improving after a recession in 2020 due to the coronavirus, officials stepped up efforts to curb rampant lending in the housing sector this year, hoping to stave off an asset bubble.

Other regulatory measures include limits on lending to developers known as “the three red lines” and limits on real estate lending by banks.

© Thomson Reuters 2021


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