Beijing to ease tech curbs as zero-covid rules hit growth
‘Our main concern is future lockdowns, while shorter and more flexible, will still continue to hurt activity’
CHINA is softening its crackdown on tech companies as the country’s economy struggles to grow under Xi Jinping’s zero-covid policy.
Officials are expected to lift a ban on Didi, the country’s equivalent of taxi app Uber, signing up new customers, according to reports. Didi’s shares soared by 38pc in New York.
Investigations into two other apps, logistics giant Full Truck Alliance and recruitment company Kanzhun, will also be closed, The Wall Street Journal reported.
All three companies listed in the US last year, prompting Beijing to warn that it was concerned that sensitive data was being sent abroad.
China has embarked on a year-long crackdown on some of its biggest technology companies, seeking to curb their power and ensure they act in the interests of the government.
But the country’s recent slowdown is believed to have eased pressure on the tech sector. All three are likely to have their apps return to download stores, with the companies paying fines and the Chinese government taking 1pc stakes.
Didi is preparing to remove its shares from the New York Stock Exchange and relist them in Hong Kong.
China’s services sector contracted further during May, marking its third successive month of decline as lockdowns took their toll.
The independent Caixin services purchasing managers’ index rose to 41.4 in May from 36.2 in April, where a reading below 50 indicates contraction compared with the prior month. The improvement, which was less than expected, indicates the pace of slowdown is easing.
Companies continued to shed jobs in response to widespread lockdowns in place during the month.
Analysts at ING said Chinese services companies would probably return to growth territory in June as restrictions in Beijing and manufacturing hub Shanghai are eased.
“Our main concern is that future lockdowns, although shorter and more flexible, will still continue to hurt economic activity,” wrote economist Iris Pang.