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Monday, September 27, 2021

West shouldn’t misinterpret or overstate Beijing’s new tech regulations, ex-Google China exec says

Kai-Fu Lee, CEO of Sinovation Ventures.

Lino Mirgeler | Picture Alliance | Getty Images

The former president of Google China warned that the West ought to be cautious to not overstate or misinterpret the lately launched laws by Beijing which have damage the likes of Alibaba, Tencent and Didi.

Kai-Fu Lee, who now invests in Chinese start-ups via his enterprise capital agency Sinovation Ventures, instructed CNBC Tuesday that China is merely regulating a handful of enormous web corporations to make sure their vital market place would not damage customers.

“That’s not a lot different from what U.S. and EU have done,” mentioned Lee, who’s at the moment primarily based in Beijing.

“There should not be an overinterpretation of the intent to limit the scope of large internet companies … into an overreaching slowdown of the tech economy,” Lee added. “That would be a mistaken interpretation.”

The Chinese authorities is definitely “very big” on tech, Lee mentioned, pointing to its push on areas like synthetic intelligence, semiconductors, and cloud computing.

The Taiwanese-born American laptop scientist mentioned he expects 10 to fifteen Chinese AI corporations to go public within the subsequent 12 months and he argued that it is sensible for buyers to take stakes in corporations working in industries being backed by the Chinese authorities.

“If you choose to believe that the government will have [the] power to make or break a company, then the government is doing everything it can to make these AI, semiconductor and cloud companies. So how can it be wrong to invest in them?” he mentioned.

Alibaba, Tencent and Didi have seen their share costs slide in latest weeks after China launched new regulation on data-sharing. Lee mentioned there’s most likely a case for “bargain hunting” because the punishments have now been handed out.

When it involves regulating expertise corporations, Lee mentioned China is way more “action-orientated” than the U.S.

“The way the U.S. deals with large internet companies is to go through congressional hearings, judicial appeal, and antitrust and justice department,” he mentioned.

“It takes a long time and usually no action. China is much more action orientated,” he mentioned, including that Americans aren’t used to the pace.

“Fast decisions, if made correctly, will force these companies to reform and give a chance to smaller companies, which we invest in, to have a chance, creating a healthier ecosystem,” Lee mentioned.

Ignore China ‘at your peril’

Earlier this week, advert guru Martin Sorrell warned that it is unwise for corporations to utterly ignore China regardless of the challenges that exist within the nation.

“It is the world’s second largest economy,” Sorrell instructed CNBC’s “Squawk Box Europe” on Monday. “It’s going to be the world’s largest economy in a few years, not on a per capita basis, but on an absolute basis, and you ignore it at your peril.”

Last week, billionaire George Soros criticized Blackrock, the world’s largest asset supervisor, for its investments in China. Writing in The Wall Street Journal, Soros described BlackRock’s initiative in China as a “tragic mistake” that might “damage the national security interests of the U.S. and other democracies.”

In response, a BlackRock spokesperson mentioned: “The United States and China have a large and complex economic relationship.”

They added: “Total trade in goods and services between the two countries exceeded $600 billion in 2020. Through our investment activity, U.S.-based asset managers and other financial institutions contribute to the economic interconnectedness of the world’s two largest economies.”

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