China’s Internet stocks jump on the arm for the healthy development of the platform economy

Staff at an industrial zone in Lianyungang, east China’s Jiangsu province, sort parcels on Friday, the day China’s major e-commerce platforms, including Alibaba’s JD and Tmall, celebrate the 618th this year mid year shopping festival. Photo: VCG

China’s Internet shares jumped on Thursday after Premier Li Qiang chaired a meeting with major domestic platform operators, as the central government’s encouraging tone serves as a slap in the arm for the healthy development of the platform economy.

Analysts and industry insiders said that positive signs indicate that the rectification of major problems in platform companies has been completed, and the regulatory system has gradually improved. Now, Chinese Internet companies are expected to play a bigger role in the country’s economic upgrade and intensifying high-tech competition between China and the United States.

Recent communications by government agencies with private enterprises underlined the special importance the central government attaches to the private sector and served as a serious implementation of policies that support the development of the private economy, analysts said.

In the Hong Kong market, major Chinese food delivery platform Meituan closed up 5.73% at HK$134.6 ($17.49) on Thursday, video-sharing site Bilibili was up 7 .52% to HK$133 and Tencent rose 2.88% to HK$349.8.

The Guotai CSI Hong Kong Connect Technology ETF, which includes companies like Tencent, Xiaomi and Kuaishou, rose 3.09% on Thursday to 0.801.

The positive performance came after a symposium on the platform economy, during which Li said the sector has stimulated demand, provided an engine for innovation and development, created new channels for employment and entrepreneurship and offered support for public services, the Xinhua news agency reported.

He encouraged platform enterprises to remain confident and look forward to lead development, create jobs and participate in international competition.

On the same day, the National Development and Reform Commission approved the projects of 10 Internet giants, including Alibaba, Tencent and Meituan.

“These moves send a strong signal that the intense regulation and rectification of the platform economy has ended, and the development of major platform enterprises has entered a new stage of regulated development,” Ma Jihua, founder of Beijing, told the newspaper. DARUI Management Consulting Co. The Global Times Thursday.

Dong Shaopeng, a senior researcher at the Chongyang Institute for Financial Studies at Renmin University of China, said the latest round of rectification has improved the corporate governance of Chinese Internet companies and resolved risks in a timely manner, unlocking great potential for the innovation.

The well-regulated, healthy and sustainable development of China’s platform economy conforms to the needs of the era, as the country’s economic transformation and upgrading will be driven by advanced technologies, while some high-tech industries such as cloud computing are become a new battleground in the technological “decoupling” of the United States from China, Ma said.

“As the world enters the Internet of Things era, the development of the real economy is closely related to the Internet. With wide coverage, platform companies play an important role in boosting investment, employment and domestic consumption,” a senior private equity investor who focuses on technology investments told the Global Times.

He said the medium to long-term outlook for the internet sector is bright and vast, with new opportunities emerging in every segment along the industrial chain, such as artificial intelligence (AI), cloud computing, the Internet of Things, blockchain and digital currencies. .

Along with the launch of OpenAI Inc’s ChatGPT, leading Chinese Internet companies are looking to upgrade their AI language models.

Chinese speech recognition company iFlytek said it plans to surpass the capabilities of the Chinese-language ChatGPT by catching up with the English-language chatbot in the fourth quarter of the year.

According to a report released by Zhidongxi, an AI-focused research firm in China, 51 generative AI startups worldwide raised about 100 billion yuan ($13.96 billion) in the first half of 2023 , with 22 Chinese companies receiving funding.

“The Chinese government always supports the development of platform companies and encourages them to lead the development, create more jobs and fully showcase their capabilities in international competition,” Dong said.

Recently, government agencies have held meetings with private companies to establish and improve regular reporting mechanisms, which are the fresh air of the new government, he said.

At a critical juncture in economic transformation and against the backdrop of major changes in the global political and economic environment, there is much to be done to improve China’s business environment and therefore more such communications are likely, according to Dong.