China’s government is buying shares in Alibaba, ByteDance, Tencent, and other tech companies to give the CCP special rights over certain business decisions.
The Chinese government is buying shares, usually a 1% holding in a vital area, in tech companies like Alibaba, ByteDance, and Tencent to be more deeply involved in their businesses, according to a report from the Financial Times. These shares are known as “special management shares” that enable the government to make certain decisions at these companies, enacting more significant influence over the tech sector and the content it provides to China’s people.
Details of the Chinese government’s plans to buy shares in multimedia giant Tencent are still under discussion. The company reportedly wants a government agency from its home province of Shenzhen to buy the stake — rather than the Beijing-based fund that bought shares of Alibaba and ByteDance.
A state investment fund set up by the Cyberspace Administration of China purchased a 1% stake in a unit of TikTok’s parent company ByteDance called Beijing ByteDance Technology, which enabled it to name one of its directors.
Communist Party official Wu Shugang, formerly overseer of online commentary at China’s internet regulator, joined the board. Wu will have a say over business strategy and investments, mergers and profit allocations, and control over content at ByteDance’s media platforms across China.
The same fund bought a 1% share of e-commerce leader Alibaba’s subsidiary, Guangzhou Lujiao Information Technology. This purchase means to tighten control over content streamed by Alibaba’s video unit Youku and web browser UCWeb.
The purchases of these “golden shares” juxtapose with some of the strict punishments — usually fines — issued by the Chinese government due to the tight grip Beijing has kept on its technology sector. But the loss of foreign investors and stringent COVID-19 lockdowns have encouraged the Chinese government to rethink its approach toward tech.