What's going on?

On Thursday, Chinese internet giant Tencent announced plans to slash its ownership in ecommerce titan JD.com by giving $16 billion worth of shares in the company to its own investors.

What does this mean?

Over the last decade, Tencent�s bought up stakes in a slew of Chinese tech startups that have since �gone public�, helping it build a portfolio worth $190 billion at the end of September � and representing about a third of the company�s market value.

But Tencent�s found itself in the Chinese government�s crosshairs lately: that might be because, as one of JD.com�s biggest shareholders, it�s given the ecommerce firm access to its leading chat and commerce app WeChat that�s used by most Chinese shoppers. And by simultaneously blocking JD.com�s rival Alibaba�s links to services from the platform, Tencent could be acting unfairly. By giving $16 billion worth of JD.com stock to its shareholders and thereby reducing its ownership from 17% to around 2%, Tencent will hope to keep regulators at bay and avoid any further damage to its reputation or share price (tweet this).

Why should I care?

For markets: Tencent�s other investments could be at risk.
JD.com�s stock fell 7% on Thursday, perhaps because investors anticipated some of the Tencent investors set to receive new shares might quickly ditch them, creating downward pressure on the stock � or over the fact that JD.com�s WeChat advantage may disappear. Investors also appeared to worry that some of Tencent�s other big investments might also soon be sold off and sent stocks of both Pinduoduo and short video app Kuaishou down.

Zooming out: China likes giants, as long as they�re rare.
While Tencent�s slimming down, the Chinese government gave three �rare earth� producers the green light to fatten up by merging. The combined company will control 70% of China�s rare earth production, which is important in making everything from smartphones to electric vehicles. The US should take note given the country�s reportedly a decade away from not having to rely on importing rare earths.