China's government continues to strengthen its grip on the country's multi-billion dollar technology industry.

The competition authority SAMR published a whole bundle of regulatory proposals on Tuesday to counteract what it sees as unfair competition and uncontrolled data processing.

The advance caused horror on the stock market: The prices of corporations such as Alibaba, Tencent, Bilibili and Meituan collapsed.

Hendrik Ankenbrand

Business correspondent for China based in Shanghai.

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Bastian Benrath

Editor in business.

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After years of giving the tech sector a free hand, the Beijing government has been tightening the thumbscrews for some time.

With the presentation of a five-year plan for stricter regulation of the economy, it signaled last week that companies and their business models could be massively disrupted by surprising, violent and far-reaching interventions by the state for years to come.

Huge penalties have already been imposed on alleged market abuse and violations of consumer rights.

Algorithm ban planned

The regulatory authority is now planning that companies will no longer be allowed to use data or algorithms to direct data traffic or influence users' decisions. In addition, the aim is to prevent companies from disseminating misleading information in order to make competitors look bad. The agency also has its sights set on marketing campaigns that target fake reviews or ratings. That could make life more difficult for e-commerce marketplaces and video portals, said analyst Michael Norris of the consulting firm AgencyChina.

On the Hong Kong stock exchange, the price of the digital conglomerate Tencent then fell by a good 4 percent, and that of the digital service group Meituan, which is known for its food delivery service, by 3.5 percent.

In New York, the share of China's largest online retailer Alibaba was a good 3 percent weaker before the market.

At the beginning of July, Beijing caused shocks on the international financial markets when the government first banned the DiDi Chuxing car service, which had gone public in New York two days earlier, from new business and initiated an investigation into alleged breaches of national security by revealing sensitive data.

Broader attack on the private sector?

Then the regulators forbade the highly profitable branch of private tutoring companies, also listed in many cases in New York, from making a profit. The supervisory authorities also cracked down on providers of food delivery services, online computer games and online advertising, which has meanwhile resulted in losses totaling 1 trillion dollars on the stock exchanges.

Whether the party only wants to better regulate rampant tech industries with its interventions and help the market to become more competitive, or whether the blows are to be seen as broad attacks on the private sector, opinions differ at home and abroad. The government paper presented last week is very general. In order to guarantee the well-being of the "people", areas such as artificial intelligence, the digital economy, digital finance industry (fintech), big data and cloud offerings will be regulated more stringently by 2025, he said.