China’s ‘Big Tech’ crackdown: Beyond the headlines

Much is being said about China’s crackdown on its tech industry. And yet, behind all that noise, there’s nothing new about what China has done. Many governments around the globe are pushing for stronger legislation and more aggressive enforcement of antitrust law. China has merely been playing catch-up with the developed world after years of loose regulatory oversight.

The difference here is the speed under which China can operate. Its regulators wrapped up their antitrust probe into China’s e-commerce tech giant in just four months. In other major economies, the wheels turn slower, and such cases can take years – if not decades – to resolve.

It needs highlighting that China’s anti-monopoly regulations are aimed at large corporations within the e-commerce and e-payments space. But they have a lesser impact on the tech industry as a whole. The big fine imposed on China’s e-commerce tech giant was designed to set an example and bolster awareness of anti-monopolistic practices, as well as the need to adhere to laws. 

Without regulations, nothing will stop e-commerce platforms doing whatever they can to keep competitors out of the market. They can do so by forcing merchants to choose between them and a rival platform, as appears to have been the case with China’s e-commerce tech giant, or by going on an acquisition spree with the sole purpose of eliminating new entrants. And I guess we can all agree that none of this would be fair for merchants and the end-consumers.

Within the e-payments space, the People’s Bank of China issued a consultation paper covering the regulation of non-bank payment companies. We believe this will make them less competitive compared to bank-issued credit cards and the upcoming E-CNY – the first digital currency issued by a major economy. These antitrust rules are expected to also stop incumbent mobile payment platforms from engaging in aggressive anti-competitive behaviour.

In our view, China’s new antitrust regulation is not designed to curb the innovation, but to encourage innovation within the internet sector by providing a healthy business environment, where small start-ups can compete with tech giants. Without regulation, China’s internet sector would be dominated by a handful platform companies and innovation would wane.

By cracking down on its tech giants, China hasn’t abandoned its ambition to become a leading digital economy. Quite the opposite. The increase in regulatory scrutiny is likely to lead to more competition within the internet sector, which we believe should benefit consumers and set China on its path to meet a very important target outlined in its 14th Five-Year Plan: to transform into an innovation powerhouse.

Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

When investing in less developed countries, you should be prepared to accept significantly large fluctuations in value.

Investment in certain securities listed in China can involve significant regulatory constraints that may affect liquidity and/or investment performance.

当資料ご利用上のご注意

当資料は情報提供を目的として、インベスコ・アセット・マネジメント株式会社（以下、「当社」）のグループに属する運用プロフェッショナルが英文で作成したものであり、法令に基づく開示書類でも特定ファンド等の勧誘資料でもありません。内容には正確を期していますが、必ずしも完全性を当社が保証するものではありません。また、当資料は信頼できる情報に基づいて作成されたものですが、その情報の確実性あるいは完結性を表明するものではありません。当資料に記載されている内容は既に変更されている場合があり、また、予告なく変更される場合があります。当資料には将来の市場の見通し等に関する記述が含まれている場合がありますが、それらは資料作成時における作成者の見解であり、将来の動向や成果を保証するものではありません。また、当資料に示す見解は、インベスコの他の運用チームの見解と異なる場合があります。過去のパフォーマンスや動向は将来の収益や成果を保証するものではありません。当社の事前の承認なく、当資料の一部または全部を使用、複製、転用、配布等することを禁じます。

IM2021-064

そのほかの投資関連情報はこちらをご覧ください。https://www.invesco.com/jp/ja/institutional/insights.html