Chinese public institutions are preparing to acquire what are described as “golden shares” in the units of Alibaba Group Holding and Tencent Holdings.
This attack is priced in as Beijing moves to gain greater control over key players in the world’s largest internet arena.
Controversy ensues as Beijing prepares to loosen its grip on the branch and overcome the crushing pressure that has gripped nearly every internet space for more than a year.
This share structure, which in theory allows the government to nominate executives or influence valuable company decisions, may have provided officials with a mechanism to influence the branch over the long term.
A branch of China Cyberspace Administration (CAC) acquired 1 percent of an Alibaba digital media subsidiary in Guangzhou on January 4, according to the Qichacha corporate database.
The company’s media portfolio includes businesses such as the streaming platform Youku and the portable browser UC Web.
Funding of shares purchased from Alibaba is supported by CAC, along with leading government firms such as CITIC, China Post, and China Mobile, the database shows.
Discussions are also ongoing about a government agency buying a similar stake in Tencent’s subsidiary, according to a source familiar with the matter who spoke to Bloomberg.
There are growing signs that the Xi Jinping administration, eager to revive the world’s No.
According to Reuters, Didi Global Inc., one of the most high-profile victims of the crackdown, may receive approval to launch its apps again next week and complete its return to portable app stores as many expect.
FT’s news made a sound
It is stated that the increasing Chinese state influence on companies may increase the scrutiny of companies outside of China and slow their growth, with the Financial Times reporting that officials will take a 1 percent direct stake in each of Alibaba and Tencent companies.
Beijing has already acquired a gold stake in Tiktok parent company Bytedance and Kuaishou.
New market-friendly breakthroughs were quickly made in China after a sudden U-turn in strict Kovid restrictions in early December.
As the country ends the two-year ban on Australia’s coal imports, it has begun to loosen its grip on tech giants and break the strict “three red lines” that are exacerbating the destruction in the real estate sector.
The question to be asked now is whether the policy overhaul represents a true return to the resilience that has fueled China’s economic rise over the past four decades, or does it represent a sudden repercussion on a deteriorating economy.
Shares of Tencent and Alibaba were largely unchanged on the Hong Kong Stock Exchange, making up for earlier losses.
Banny Lam, research leader at Ceb International Inv Corp Ltd, said, “The news is somewhat positive to me. The duo had been dealing with printing problems in recent years.
The government share could help both Alibaba and Tencent give the green light to potentially do business in new areas and reduce the risks of further restrictions by regulators.”
Chinese government bodies had invested billions of dollars over the years in high-profile private startups, from Didi to Jack Ma’s Ant Group Co. In recent years, while Beijing has put pressure on all areas of the internet, these companies have also received nominal shares of 1 percent, defined as the “golden share”.
It’s unclear how Beijing will use this right of retention, but analysts think it can help the government access valuable information beyond just having a seat or word at the table. TikTok is owned by ByteDance Ltd. and Weibo Corp. it is in the middle of the most important internet companies to disclose this kind of regulation.