Stocks rally after Chinese premier’s meeting with tech executives

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Chinese tech stocks are rallying after top government officials signaled companies should try to grow rather than rein in their influence and help strengthen China’s position on the world stage.

Premier Li Qiang offered his support to senior tech officials at a meeting in Beijing on Wednesday, while the country’s internet regulator said on Thursday it would push innovation in generative artificial intelligence as it released updated rules for the sector. Have done

The country’s state planning agency also praised groups including Tencent and Meituan for promoting the country’s semiconductor efforts.

The official outreach follows the conclusion of a regulatory campaign against Jack Ma’s Ant Group, which was fined nearly $1 billion last week. The central bank said financial platform operators such as Ant and Tencent have resolved most of their outstanding issues.

The apparent end of crackdown on major tech conglomerates has driven New York-listed shares of Ant sister company Alibaba up 12 percent in the past week, while the Hang Seng Tech index rose 4 percent on Thursday and is up nearly 9 percent. From Monday Alibaba shares are down 70 percent since Beijing canceled Ant’s blockbuster public debut in 2020, and are up only 3 percent since the start of the year.

The change in Beijing’s regulatory stance comes amid faltering economic growth, with many official figures pointing to a wider recession in China. There is also growing recognition that the crackdown on domestic tech groups has hurt the country’s technological competitiveness with the US.

Li, China’s number two leader, told the gathered tech executives that they needed to “raise their international competitiveness and dare to compete on the global stage”.

Officials from TikTok owner ByteDance, food delivery group Meituan and Alibaba Cloud were in the audience, according to state media. Li said the government would normalize regulation and called on all levels of government to create a better market environment.

Li said, the authorities should “reduce the cost of compliance and promote the healthy development of the industry”. “In the journey of building a modern socialist country, the platform economy has great potential.”

Meanwhile, China’s cyberspace administration said on Thursday it would “promote innovation” and “give equal importance to development and security” in newly issued interim measures governing AI, words that were not previously included in the April draft . The rules, which took effect in mid-August, encouraged all industries to use generative AI for the first time.

The measures state that generative AI providers with products capable of “influencing public opinion” must submit them to a security review and that all generated content must adhere to “core socialist values”.

A person close to the regulator said the updated rules are not final and the CAC is still working out the details of the licensing regime for the final version.

Earlier, China’s state planning agency on Wednesday praised Tencent and Meituan for supporting the semiconductor start-up at the center of a tech battle with the US.

Shanghai-based Enflame Tech, backed by Tencent, has designed chips to be used in large-scale clusters of artificial intelligence servers, while Meituan-backed Rong Semiconductor is leading the chip manufacturing, the National Development and Reform Commission said. “Both are important emerging players in the semiconductor industry,” the agency said.

Bernstein analyst Robin Zhu said China’s official show of support was a disappointing moment for investors who would have liked to see various announcements conveying a similar message last year.

But Zhu cautioned that the changing regulatory tide won’t lift all boats in Chinese technology. “Given the increasingly divergent fundamental outlook across sectors, investors will need to be selective when picking stocks,” he added.