{"id":117414,"date":"2021-06-30T03:31:01","date_gmt":"2021-06-30T03:31:01","guid":{"rendered":"https:\/\/fin2me.com\/?p=117414"},"modified":"2021-06-30T03:31:01","modified_gmt":"2021-06-30T03:31:01","slug":"china-has-gone-too-far-in-clamping-down-on-big-tech-that-will-hurt-economic-growth-says-analyst","status":"publish","type":"post","link":"https:\/\/fin2me.com\/business\/china-has-gone-too-far-in-clamping-down-on-big-tech-that-will-hurt-economic-growth-says-analyst\/","title":{"rendered":"China has gone &#x27;too far&#x27; in clamping down on big tech \u2014 that will hurt economic growth, says analyst"},"content":{"rendered":"<ul>\n<li>The Chinese government has gone &quot;too far&quot; in cracking down on large technology companies, said Scott Kennedy of the Center for Strategic and International Studies.<\/li>\n<li>That will hurt innovation in the private sector and slow down China&#x27;s economic growth, said Kennedy, who is senior advisor and trustee chair in Chinese business and economics at CSIS.<\/li>\n<li>Kennedy said China will likely &quot;primarily depend&quot; on state-led investments to boost economic growth in the next decade.<\/li>\n<\/ul>\n<p>The Chinese government has gone &quot;too far&quot; in cracking down on large technology companies \u2014 that will hurt innovation and slow down economic growth, an analyst said Tuesday.<\/p>\n<p>Regulators in China have in the last few months ramped up scrutiny on the country&#x27;s tech giants such as Alibaba and Tencent. The companies now face fines and new rules aimed at reining in monopolistic business practices.<\/p>\n<p>&quot;There&#x27;s certainly a logic to clamping down on monopolies and some of the abuses of power that we see from some of the companies. But they&#x27;ve gone too far and basically scared innovators from innovating,&quot; said Scott Kennedy, senior advisor and trustee chair in Chinese business and economics at the Center for Strategic and International Studies.<\/p>\n<p>Kennedy explained to CNBC&#x27;s &quot;Street Signs Asia&quot; that the private sector is an important source of productivity gains that fuel much of China&#x27;s economic growth.<\/p>\n<p>But the regulatory crackdown may hinder the formation of new companies, while existing firms \u2014 particularly small ones \u2014 may be scared to make investments in the future, he added.<\/p>\n<p>&quot;That&#x27;s where all of China&#x27;s important, good, high productivity growth lays, and which we may never see as a result of the clampdown that we&#x27;re seeing right now,&quot; said Kennedy.<\/p>\n<p>That potential hit to China&#x27;s growth prospects adds to the economic challenges confronting the ruling Chinese Communist Party, which this week marks its 100th year since its founding. China \u2014 the world&#x27;s second-largest economy \u2014 is also grappling a mounting debt pile, an aging population and widening inequality.<\/p>\n<h2>China&#x27;s economic growth outlook<\/h2>\n<p>The World Bank on Tuesday raised its 2021 economic forecast for China, citing an &quot;effective suppression&quot; of Covid-19 as helping the country&#x27;s recovery. The bank expects the Chinese economy to grow 8.5% this year, higher than its previous forecast of 8.1% expansion.<\/p>\n<p>Last year, China&#x27;s economy grew 2.3% from a year ago \u2014 making it the only major economy that recorded growth as the coronavirus spread globally.<\/p>\n<h2>Read more about China from CNBC Pro<\/h2>\n<p>JPMorgan picks its favorite Chinese stocks on everything from hydrogen to EV batteries<\/p>\n<p>Wedbush says Tesla faces a &#x27;moment of truth&#x27; in China with recall<\/p>\n<p>Jim Cramer says he feels better about Apple&#x27;s China exposure after Nike earnings<\/p>\n<p>Kennedy said China will likely &quot;primarily depend&quot; on state-led investments to boost growth in the next decade. That&#x27;s because consumption, while growing, has not bounced back from the pandemic to levels seen in investments, he added.<\/p>\n<p>To boost consumption, China needs to liberalize parts of its services sector so that consumers have additional ways to spend their money, said Kennedy.<\/p>\n<p>&quot;We all have seen this coming, but &#8230; it&#x27;s still a bridge too far in the short term at least,&quot; said the analyst.<\/p>\n<p>Chinese authorities want to reduce the economy&#x27;s reliance on debt-fueled investments for growth. But their multi-year effort to deleverage took a pause last year due to the pandemic, sending China&#x27;s debt-to-GDP ratio to an all-time high of nearly 290% in the third quarter, data by the Bank of International Settlements showed.<\/p>\n<p><em>\u2014 CNBC&#x27;s Evelyn Cheng contributed to this report.<\/em><\/p>\n<p>Source: <a href=\"https:\/\/www.cnbc.com\/2021\/06\/30\/chinas-crackdown-on-tech-firms-will-hurt-economic-growth-says-analyst.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Chinese government has gone &quot;too far&quot; in cracking down on large technology companies, said Scott Kennedy of the Center for Strategic and International Studies. 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