West shouldn’t misinterpret Beijing rules: former Google China executive

West shouldn't misinterpret Beijing rules: former Google China executive

Kai-Fu Lee, CEO of Synovation Ventures.

Lino Mirgeler | Image alliance | Getty Images

The former chairman of Google China has warned that the West should be careful not to overdo or misinterpret the rules recently introduced by Beijing that have hurt Alibaba, Tencent and Didi.

Kai-Fu Li, who now invests in Chinese start-ups through his venture capital firm Synovation Ventures, told CNBC on Tuesday that China only regulates a few large internet companies to ensure that their significant position in the market should not harm consumers.

“It’s not much different from what the United States and the European Union have done,” said Li, who is currently based in Beijing.

“The intention to limit the reach of large Internet companies should not be over-explained… the extreme downturn in the tech economy,” Lee said. “It would be a misinterpretation.”

The Chinese government is actually “very big” on technology, Li said, highlighting its push in areas such as artificial intelligence, semiconductors and cloud computing.

The Taiwan-born American computer scientist said he expects 10 to 15 Chinese AI companies to go public next year and argued that it makes sense for investors to take stakes in companies. operating in sectors supported by the Chinese government.

“If you choose to believe that the government will have [the] With the power to make or break a business, the government is doing everything it can to make these AI, Semiconductor and Cloud companies. So how can anyone go wrong with investing in them?

Alibaba, Tencent and Didi have seen their stock prices drop in recent weeks after China imposed a new rule on data sharing. Lee said it was likely a “bargain hunt” case as the sentence has now been passed.

Regarding the regulation of technology companies, Li said China is much more “action-oriented” than the United States.

“The way America deals with the big Internet companies is to go through Congressional hearings, court appeals and antitrust laws and the Department of Justice,” he said.

“It takes a long time and usually no action. China is too action-oriented, ”he said, adding that Americans are not used to the pace.

“Quick decisions, if taken the right way, will force these businesses to improve and give the small businesses that we invest in to build a healthier ecosystem,” Lee said. noted.

Ignore China “at your own risk”

Earlier this week, advertising guru Martin Sorrell warned that despite the challenges the country faces, it was not wise for companies to ignore China altogether.

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

Billionaire George Soros last week criticized BlackRock, the world’s largest asset manager, for investing in China. Writing in the Wall Street Journal, Soros described BlackRock’s initiative in China as a “tragic mistake” that “would harm the national security interests of the United States and other democracies.”

In response, a spokesperson for BlackRock said, “The United States and China have an important and complex economic relationship. “

He added: “Total trade in goods and services between the two countries exceeded $ 600 billion in 2020. Through our investment activity, US-based asset managers and other financial institutions are able to improve the economic interconnection of the two largest economies in the world. to contribute.”

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