The Chinese authorities intend to get "golden shares" in the national Internet giants Alibaba and Tencent. Thus, the authorities want to gain control and leverage over companies that dominate the Chinese and global markets, writes the Financial Times.
The publication notes that Beijing is changing tactics against its giants. If earlier the authorities threatened with severe inspections and multi-billion dollar fines, now the Chinese authorities are trying to move from a policy of threats to cooperation, thus gaining direct control within the companies themselves. Such an approach will obviously suit foreign investors more, since endless checks and fines led to a collapse in the capitalization of companies, including Alibaba, which still cannot recover from the peaks of October 2020, when the company's shares cost over $300, against $114 now.
The desire to acquire control in Alibaba and Tencent is not a precedent for the Chinese authorities, who already have a “golden share” in ByteDance (the owner of TikTok). The "golden share" allows the Chinese authorities to influence the internal processes within the company, as well as to censor decision-making. In the case of ByteDance, according to the publication, the Chinese authorities determine the content that is published on TikTok.
At the same time, the authorities do not incur large expenses: as a rule, they buy small shares in subsidiaries, but this is enough for a representative of the Chinese Communist Party (CCP) or another official to be in leadership positions. The Chinese authorities have introduced this practice since 2015.
“The state does not intend to step aside, this is a trend for the future,” said one of the sources of the publication.
According to the publication, last week, for this very purpose, the state investment fund, created by the China Cyberspace Administration, bought a 1 percent stake in Alibaba's subsidiary, Guangzhou Lujiao Information Technology. The purpose of entering the group's assets is to tighten control over the content of the Youku streaming video service, as well as the UCWeb browser, which are part of the group of companies.
Regarding the stake in Tencent, the authorities have not yet agreed on the structure of the purchase, however, a fundamental decision on entering the capital has already been made: the "golden share" will be bought in one of the main "daughters" of the telecommunications giant. The publication also claims that Tencent does not oppose the state's entry into the capital, but insists that the Shenzhen fund enter the capital instead of the Beijing fund.