China's financial stimulus plan: Igniting growth in the tech sector

Despite economic hurdles, the resilience of China's tech sectors is evident. Bolstered by government policies that champion tech innovations and the globalisation of tech companies, these sectors continue to thrive. Key players include AI, New Energy, New Energy Vehicles (NEV), Autonomous Driving, Semiconductors, Biotech, Electric Vertical Takeoff and Landing (eVTOL), Robotics, among others. Remarkably, a quarter of all unicorns are nestled within AI and semiconductors.

Geopolitical tensions, technology ownership concerns, supply chain risks, and data and cybersecurity issues notwithstanding, international tech companies remain steadfast in their engagement with the Chinese market. A case in point is Apple, which recently inaugurated its largest lab outside the US in China, signalling a robust commitment to the market.

China has announced a revised investment negative list, effectively eliminating all manufacturing restrictions. It has also launched pilot programs that allow foreign investors to own hospitals outright and engage in the development and application of certain human stem cells and gene diagnosis and treatment technologies. In a significant move to relax cross-border data transfer, Beijing, Shanghai and Tianjin have introduced a negative list/positive list for cross-border data transfer, offering further relaxations in FTZs. For example, the sectors covered under the negative list for cross-border data transfer of Beijing include automobiles, medicine, retail, civil aviation, and AI. For our firm's recent update on China cross-border data transfer, please visit here.

The Ministry of Industry and Information Technology (MIIT) has announced a pilot scheme that permits 100% foreign ownership for Internet Data Centres (IDC), Content Delivery Networks (CDN), and other telecommunication services, which were previously restricted or limited to 50% ownership through the Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA). This pilot programme of lifting foreign investment restrictions in IDCs is set to benefit data centres, making it a welcome development for existing and potential IDCs in China. To download a copy of our global data centre guide, please click here.

Despite economic headwinds and regulatory challenges, Chinese tech companies are proactively expanding overseas. Compared with M&As which are more vulnerable to longer approval procedure and even restrictions, structured deals such as setting up joint ventures with local partners are more favourable. Singapore continues to be the favoured jurisdiction for Chinese tech companies seeking globalisation. It serves as a vital link between Southeast Asia and the rest of the world.