BEIJING. – China has released a five-year plan to tighten regulatory control over strategic sectors like technology and healthcare, as part of Beijing’s latest push to assert Communist Party supremacy over the world’s second-largest economy.
The party’s Central Committee and the State Council, or cabinet, jointly released a policy document late Wednesday that would expand government legislation and create a modern regulatory environment to “meet people’s ever-increasing demands for a good life.”
The release of the plan follows a series of regulatory moves that have stunned investors in Chinese business and slashed tens of billions of dollars from the valuations of some of the country’s biggest tech companies.
Beijing appeared to use the statement to offer guidance on the scope and duration of its regulatory overhaul, although the far-reaching document did not include a list of specific instructions or measures.
Analysts said the crackdown would intensify.
“Regulators in China will continue to review companies in internet and technology-related sectors for a range of issues, including overseas listings, data security, consumer protection, anti-competitive practices and merger irregularities,” said research director Bruce Pang at China Renaissance, the investment bank.
The far-reaching document highlighted the “urgent need” for additional legislation to regulate the tech and education sectors and address antitrust issues that are key to improving people’s livelihoods.
Timely research should be conducted to create regulatory frameworks for the digital economy, internet finance, artificial intelligence, big data and cloud computing to ensure that “new business models develop in a healthy way” , adds the document.
However, Pang said China’s tech sector will remain under pressure due to a series of socio-economic challenges that Beijing says need to be addressed.
“We expect near-term disruptions to market sentiment and pressure on valuations of overseas-listed Chinese companies in related sectors amid risk of regulatory overruns,” he said.
“Policy makers want to address and solve social problems effectively and efficiently to ensure social justice, justice, equality and national security, as well as to avoid risks.”
Various Chinese regulators have unveiled a slew of regulations aimed at imposing limits on many sectors and businesses to protect national security and social stability in recent weeks. The Department of Industry and Information Technology released a final version of its smart car guidelines yesterday.
The rules state that companies wishing to export user or vehicle data must first undergo a data security check by regulators. Approval would also be required before the vehicles’ self-driving software can be updated.
The China Banking and Insurance Regulatory Commission also unveiled a plan to reform the country’s online insurance industry.
According to a Financial Times statement, firms and intermediaries in the industry have been ordered to fix a number of issues, including customer data security practices, marketing and fees.
The regulator called it a major political effort and said it would step up inspections. Chinese stock markets were broadly lower on Thursday after the announcement, with Hong Kong’s Hang Seng Tech index falling about 1%.
Thomas Gatley, a Beijing-based analyst at Gavekal Dragonomics, a research group, said the pace and severity of the sudden regulatory intervention should ease, but Beijing’s election campaign “would certainly not be without hitches”.
Gatley said the reforms would fall into two broad categories: control of information and “common prosperity policies” or ways “to meet the needs of middle-class people both in their role as consumers and in their role as workers.