(Bloomberg) — China sought to reassure investors that venture capital still has a role to play in the technology sector after a year-long crackdown on online gaming, tutoring and other areas hammered the shares of its biggest companies including Alibaba Group Holding Ltd. and Tencent Holdings Ltd.
“We will promote the development of venture capital,” Premier Li Keqiang said in prepared remarks Saturday at the opening of the National People’s Congress. “New financial products and services” will be developed to support research and development, he said.
The Chinese government’s regulatory crackdown has been one of the largest concerted actions against private enterprise in decades, wiping out $1.5 trillion in market value last year. Didi Global Inc.’s New York listing came under fire, while the once flourishing tutoring sector had its future redefined after companies such as TAL Education Group were banned from profiting in some of their most lucrative businesses.
The crackdown opened the door for a new generation of startups that have been selected under an ambitious government program aimed at fostering a technology industry that can compete with Silicon Valley. The so-called “little giants” are getting Beijing’s support to help the country shake off its foreign dependence on everything from chips to medicine.
In Li’s speech, he said the prevention of “unregulated expansion of capital” was one of last year’s achievements. Since 2021, Beijing has been talking about preventing the “disorderly expansion of capital” to explain a series of regulatory actions taken against tech companies, private tutoring firms and celebrities. Most recently, it expelled the former party secretary of tech hub Hangzhou City for charges including collusion and supporting disorderly expansion of capital.
“We must have a good understanding of the defining features of capital and the way it works,” Li said. “So as to support and guide its well-regulated and sound development.”
Other tech highlights from Li’s speech:
- Improve governance of digital economy
- Act quickly to improve regulatory rules for key industries, emerging sectors, and sectors with foreign involvement
- Promote scientific and technological innovation, eliminate supply bottlenecks
- Build more digital information infrastructure
- Enhance research and supply capacities for key software and hardware
- Nurture specialized and sophisticated enterprises that produce new and unique products
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