China’s technology regulation is part of a bigger push to become a “superpower”

GUANGZHOU, China – China’s recent moves to regulate the big tech giants are part of its broader push to become a technology “superpower,” according to an expert on CNBC.

Like the United States and the European Union, China is working on how to regulate the technology sector in many areas, from data protection to antitrust. China’s technology companies have grown, largely without regulatory difficulties, and have become one of the largest in the world.

And there are a number of regulations that have come into force or are underway.

In November, China’s central bank and regulators released draft rules on so-called microcredit, which included provisions such as capital requirements for technology companies offering loans.

The Chinese State Administration for Market Regulation (MRSA) has also published draft regulations that seek to stop the monopolistic practices of Internet platforms. It is one of the broadest proposals in China to regulate large technology companies.

Last month, SAMR said it had initiated an Alibaba investigation into monopolistic practices.

And in October, China released a personal data protection bill aimed at regulating the way companies process users ’data.

All of these regulations are part of China’s biggest effort to become a major global technology power, according to Kendra Schaefer, a partner at Trivium China, a Beijing-based research company.

“Underneath all this, I think China understands that if it is to become a technological superpower … then it has to lay a solid regulatory foundation,” Schaefer said on CNBC’s “Beyond the Valley” podcast.

“You have to put these bases in the way it regulates the company’s operations, but you also have to put these bases in terms of data. In fact, data can be the most important regulation you have to set.”

“All of these things are fundamental and they really are a kind of framework, a springboard from which China can develop and move faster.”

It seems that Beijing has taken a tougher stance against the country’s technology companies recently. In November, regulators forced Antibaba’s financial group Ant Group to suspend plans for what would have been the world’s largest initial public offering (IPO) while the company handled regulatory changes. . Last month, Alibaba and two other companies received a fine for failing to make proper statements to authorities about past acquisitions.

But that doesn’t mean Beijing is working in opposition to its technology champions, according to Emily de La Bruyere, co-founder of consulting firm Horizon Advisory.

“These multinational technology companies are definitely the facilitators of the force that China is using to extend its information strategy and standards globally. That will not change. We will not see Beijing activate its Big Tech as Washington seems.” said Bruyere. he told CNBC by email.

“But, Beijing will ensure that its Big Tech acts in accordance with its rules and regulations, connects to its platforms and serves its strategies.”

Not only China is introducing profound changes in technology regulation. The European Union has been perhaps the most aggressive region in the world on this issue. Its general data protection benchmark approved in 2016 aimed to include rules on how user data was processed.

And in December, the EU introduced the Digital Markets Act and the Digital Services Act which aims to bring tighter controls on the behavior of technology giants in various areas.

But the United States has not yet taken a similar approach with broad legislation on matters such as data.

“We still don’t have good data regulation in the U.S.,” said Schaefer of Trivium China. “So we don’t have that basis, that kind of basic fundamentals, on which we can regulate, not just our domestic companies, but also foreign incoming companies.”

“I think not having this fundamental data policy is one of the reasons we take this strange dispersed approach to trying to control incoming Chinese applications like TikTok, targeted at specific Chinese companies because we don’t have universal regulation.”

Schaefer was referring to the ongoing Washington saga trying to get the Chinese company ByteDance to sell TikTok’s US operations.