By Bilal Hafeez 25-07-2019

China’s Tech Sector Is in Trouble (The Diplomat, 6 min read)

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(You can read the article by clicking here)

Recent US policies have done more to China than threaten the bottom line of Huawei and its peers – they have trickled down to the country’s workforce. This has especially plagued the so called ‘new economy’, given the tech crackdown on data privacy and intellectual property. Tech firms are aggressively cutting costs by laying off employees and squeezing more out of the remaining ones, deploying a 9am to 9pm, 6 day work week. The tech sector is already failing to absorb the 33 million unemployed, displaced wage labourers, causing a worker backlash. Going forward, China has another source of unrest to worry about. The Government is now making job creation its main policy goal, offering subsidies and tax breaks to tech firms.

Why does this matter? Beijing is now focusing on safeguarding the tech sector from shocks, since it’s a key driver of growth and a major source of employment. This would mean extending government control over the sector and decreasing its import dependence on the West.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

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