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Chinese authorities are going to buy the gold shares of Alibaba and Tencent, and this is more good than bad.
Chinese government structures want to buy the so-called gold shares of local tech giants Alibaba and Tencent - this will allow Beijing to strengthen its control over key industry players in the country. But this is rather a good sign for companies.
The Chinese leadership intends to give more autonomy to the technology sector, putting an end to the harsh government measures that have been applied here for more than a year. At the same time, holding golden shares will help the government appoint directors of companies, influence important decisions, and in the long run give officials a tool to influence the industry as a whole.
A division of China's Cyberspace Administration (CAC) acquired a 1% stake in Alibaba's subsidiary, which operates the Youku streaming platform and the UC Web mobile browser, on January 4, according to Qichacha's corporate database. On the same day, a new director was appointed in the company - the namesake of one of the CAC officials. Negotiations are also underway for the government to buy a similar stake in one of Tencent's subsidiaries in mainland China. TikTok owner ByteDance and its main competitor, short video platform Kuaishou, have already sold golden shares to the Chinese government.
Beijing has dramatically reversed course in recent months, lifting harsh pandemic lockdowns and lifting some long-term bans on energy and real estate. The market, on the other hand, took the information about the intentions of the Chinese government towards Alibaba and Tencent rather positively - this indicates the end of harsh repressive measures against companies, and with state support, they will be able to open new markets for themselves.