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Chinese Authorities Will Allow Back Didi Apps Signalling Relaxation Of Tough Regulations

Chinese Authorities Will Allow Back Didi Apps Signalling Relaxation Of Tough Regulations
Chinese authorities are planning to re-release Didi Global's ride-hailing and other apps on domestic app stores as soon as next week, according to a report by Reuters quoting information from sources. This step is a signal of the end of their two-year regulatory crackdown on the technology sector.
Since its regulatory problems began in mid-2021, Didi has been awaiting authorities' approval to resume new user registrations and downloads of its 25 banned apps in China as a critical step toward resuming normal business.
According to four of the sources, the lifting of the new user ban and the resumption of app operations for its flagship ride-hailing services and other businesses could occur before the Lunar New Year, which begins on January 22.
The one-week holiday period in China would help Didi begin to attract new clients for the business and work toward restoring normalcy, according to two of the sources.
The lifting of the ban on Didi apps would occur as Chinese policymakers seek to restore private sector confidence and rely on the technology industry to help stimulate economic activity in a country devastated by the COVID-19 pandemic.
Guo Shuqing, Communist Party chief of the People's Bank of China, told state-run CCTV on Sunday that the People's Bank of China will increase support for private firms as part of efforts to strengthen the economy, while relaxing restrictions on tech firms.
The reintroduction of apps would also mark the end of Didi's one-and-a-half-year regulatory overhaul, which began in July after the powerful cyber watchdog Cyberspace Administration of China (CAC) imposed a $1.2 billion fine on the company.
According to two of the sources, Didi already paid the fine, the largest regulatory penalty imposed on a Chinese tech firm since the antitrust regulator State Administration for Market Regulation fined Alibaba Group and Meituan $2.75 billion and $527 million, respectively, in 2021.

There was no comment on the issue from Didi. No comments were also available from CAC and the State Council Information Office, which handles media queries for the government.
The penalty imposed on Didi was part of Beijing's sweeping and unprecedented crackdown on the country's technology titans over the last two years, which has reduced their values by hundreds of billions of dollars and reduced revenues and profits.
Chinese regulators, led by the CAC, have resumed the approval process for Didi's app resumption in recent weeks, according to two of the sources and another source with knowledge of the matter.
The regulators, who submitted a report on the matter to the top party leaders last week, expect to formally receive their approval in the coming days, according to two of them.
Didi, which was founded in Beijing in 2012 and is backed by prominent investors such as Alibaba, Tencent, and SoftBank Group, ran afoul of the CAC when it went ahead with its U.S. stock listing against the regulator's wishes in 2021, according to sources.
Didi's 25 mobile apps were ordered to be removed from app stores, new user registration was suspended, and it was fined for data-security breaches as a result of this move.
Didi was also forced to end its 11-month stint as a New York Stock Exchange-traded company in June of last year, transforming it from a poster child of China's internet boom to one of the most high-profile victims of Beijing's regulatory crackdown.
According to two sources, the company previously hoped that the delisting and hefty penalty would put an end to its regulatory woes, and it planned to relaunch the apps in September after updating them to ensure compliance.
However, the return of Didi's banned apps was postponed due to China's ruling Communist Party's twice-a-decade congress and central leadership reshuffle in November, as well as COVID-19 outbreaks in many cities across the country after Beijing abruptly lifted strict virus curbs late last year.
Didi's business plans had been hampered by the delay in the return of the apps.
According to Reuters, Didi is in advanced talks with state-backed Sinomach Automobile to purchase a third of its electric-vehicle unit in order to mitigate the impact of the pandemic on its core ride-hailing business.
According to the two sources, the deal is primarily contingent on the apps' resumption for official announcement.
Didi has also suffered from regulatory issues, which have eroded its dominance and allowed rival ride-hailing services operated by Geely and SAIC Motor to gain market share across the country.

Christopher J. Mitchell

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