The Communist Party wants (a bit) less consumer internet
INVESTORS IN CHINESE tech stocks might feel like characters in an online “party game”, a type of multiplayer activity that became all the rage in 2023. The latest addition to the genre is “DreamStar”, released on December 15th by Tencent, China’s biggest digital giant, with a big gaming business. Players speed around a track as cartoon sheep and pandas, dodging cannon balls and grabbing magic clouds, sometimes plummeting through chasms only to end up back where they started.
Tencent’s share price jumped on hopes the game would challenge the wildly popular “Eggy Party”, a similar offering from NetEase, a rival developer. A week later it fell off a cliff, as did that of NetEase, after the National Press and Publication Administration (NPPA) published draft rules capping spending on online games. The next day the NPPA seemed to proffer one of those magic clouds, declaring that it desired “prosperous and healthy” development for the online-gaming industry. Tencent and NetEase shares have returned almost to where they were at the start.
The incident hints that President Xi Jinping has little appetite for another harsh tech crackdown of the sort that torched about $1trn in shareholder value between early 2021 and late 2022; on January 2nd Reuters reported that an official behind the draft gaming rules had been fired. But it is also a reminder that the government dislikes Chinese big tech’s big presence in citizens’ everyday lives—and that it would anyway prefer entrepreneurs and investors to focus on serious things like chipmaking, cloud computing and artificial intelligence (AI) for industry.
2024-01-04 08:20:25
Article from www.economist.com
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