The central government of China has announced plans for a prolonged crackdown on technology sectors in the country, as part of the details around its latest five-year plan, which could see the country’s beleaguered digital currency sector taking even more of a hit in the years to come.
Authorities in Beijing confirmed that recent steps to tighten controls on digital currency and other sectors would not be abating any time soon, with a growing emphasis on regulating and bringing enforcement action against these industries expected to form a significant part of the government’s efforts in the years ahead.
Despite a hit in investor confidence from the steps being taken by the government in recent months, the details of the plan confirm that the government will only intensify efforts to control and regulate tech sectors, and other industries, throughout the country.
The plan details proposals for greater legislation on tech industries and the environment, which is expected to target digital currency and especially block reward miners directly. The plan calls for the “health development” of new business models in digital industries, as well as promising a greater focus on law enforcement in finance and ecological management.
The plans come fresh off a recent months-long crackdown against block reward miners in the country, apparently fueled by concerns about the environmental and financial system impacts of mining and cryptocurrency in the country. More aggressive enforcement from Chinese authorities has seen many miners and digital currency companies leave China altogether, instead setting up across Central Asia, where legal regimes for block reward miners remain less restrictive.
The steps from Beijing however extend far beyond digital currency, and a number of international investors have suggested they are now reconsidering their exposure to Chinese markets, off the back of these steps from the central government.
Share prices across China’s largest tech companies have been in freefall following the announcement, with shares in Tencent, Alibaba and others taking significant losses on the news. Japanese megabank SoftBank has said it will also pause further investment in the country for the foreseeable future while these types of restrictive practices persist, in a move that could have a significant effect on inward investment.
The five-year plan also speaks of a new singular law enforcement operation, assisted by the Internet and big data, and with the help of blockchain technology to integrate government and law enforcement data.
The news will come as a disappointment to China’s tech sector, and in particular to the remaining digital currency sector based in the country. Once the world’s leading center for block reward mining, China has been seen as an increasingly less attractive place for digital currency firms to do business in recent years.
An outright ban on digital currency across the country has already forced exchanges to operate elsewhere, while the clampdown on mining activity presents only further challenges for the once burgeoning sector in China. Yet despite this restrictive approach, the government has said it does intend to support the development and implementation of blockchain technology across a range of its core administrative functions.
With the central authorities notoriously authoritarian in their approach to governance, the digital currency and technology sectors are expected to have no influence over future policy direction. And with the plan setting out proposals for the next five years, the new approach looks set to dominate the medium term future of technology and commerce in the country.
The five-year plan commences this year, and will run until 2025. Among other things, it sets out the strategic and tactical priorities of the state over the intervening period, providing forward guidance as to the intended objectives of central government.
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