Chinese President Xi Jinping called on the country’s regulators this week to step up their crackdown on tech companies and extend scrutiny to all areas of financial activity.
Xi stressed the need to regulate “platform” companies to maintain social stability during a meeting of China’s leaders on Monday, according to state-owned Xinhua News Agency. The phrase “platform company” in China typically refers to businesses that offer online services for customers.
The Chinese president added that it was necessary to strengthen regulation of the internet sector, according to a summary of his remarks published by Xinhua. The state media outlet reported that “all financial activities must be included in financial regulations,” according to Xi.
The published comments mark Xi’s first words on the topic since December, when he described antitrust supervision of the digital economy one of China’s most important priorities for 2021.
While Xi didn’t single out any company by name, his decision to double down on regulatory efforts could spell more trouble for big tech firms like Alibaba (BABA) and its financial affiliate Ant Group, which have already been grappling with increased scrutiny.
Ant, which owns the popular digital payments app Alipay and has huge interests in online investing, insurance and consumer lending, was forced to shelve a big IPO last November and has since been ordered to overhaul its business.
Beijing has long been concerned that the influence tech firms have over the financial sector makes that industry vulnerable — Ant, for example, now commands more than half of the mobile payments market in China — and officials have been looking for ways to rein them in.
Regulators may soon require Ant to behave more like a traditional Chinese bank than a tech company, suggesting strict curbs on its business. The company is also dealing with a recent corporate shakeup: CEO Simon Hu resigned late last week for personal reasons.
The next big blow to Alibaba, founded by Jack Ma, may not be far away. Its shares have been under pressure since the Wall Street Journal reported last Thursday that the company was facing a record fine for alleged monopolistic behavior. Alibaba declined to comment to CNN Business.
Tencent stock has also tumbled recently on rumors that it might be the next target for regulators.
Regulators have already questioned executives at Tencent and Pinduoduo, punished Bytedance and Baidu with fines for alleged monopolistic behaviors in corporate acquisitions, and floated new rules that could govern the operations at many tech firms.