China mulls new state-backed company to oversee tech data

China’s government has proposed establishing a joint venture with local technology giants that would oversee the lucrative data they collect from hundreds of millions of consumers, according to people familiar with the matter.

The preliminary plan, which is being led by the People’s Bank of China, would mark a significant escalation in regulators’ attempts to tighten their grip over the country’s internet sector. It envisions the creation of a government-backed entity along with some of China’s biggest e-commerce and payments platforms, the people said, asking not to be identified as the discussions are private.

The online firms would be initial shareholders in the joint venture, though top executives would need to be approved by the regulator, the people said. The central bank did not immediately respond to a request for comment.

The proposal is among a slate of options being considered to crystallise Beijing’s goal of gaining greater control over the data amassed by online behemoths from Alibaba Group Holding Ltd and Tencent Holdings Ltd to up-and-comers like ByteDance Ltd and Meituan. Companies were encouraged this month to open up data in areas from e-commerce to social media to promote healthy development of the sharing and online economies in a report that outlined the Communist Party’s priorities.

US-listed Chinese stocks plummeted, with iQIYI Inc falling nearly 20 per cent and Tencent Music Entertainment Group down 27 per cent, the biggest drop since listing in 2018. Vipshop Holdings Ltd slumped 21 per cent, the most in more than 5 years.

During an earnings call on Wednesday, Tencent chief executive officer Pony Ma said that its guiding principle is minimising platform access to user data.

“Data is extremely complicated,” said Ma. “There’s a fine line between ensuring users’ privacy and opening up data to sharing.”

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