Commentary: China’s newfound populism could hurt investor confidence

HONG KONG: Attempts by Beijing to reassure investors are growing louder. Speaking at the China International Digital Economy Expo 2021 in Shijiazhuang on Sep 6, China’s vice-premier and economic tsar Liu He said: “China’s policy to support the private sector hasn’t changed and won’t change in the future.” Two days later, the front page of the People’s Daily, the Chinese Communist Party’s newspaper of record, led with a commentary citing “three things that have not changed” - namely the status and role of the private economy, the government’s policy of encouraging and supporting the private economy, and China’s desire to develop a favourable environment for growth in the private economy. Where the People’s Daily is seen as a somewhat accurate barometer of Beijing’s thinking, the message is obvious: Beijing is aware recent regulatory changes have spooked markets and wants to ensure that sentiment does not turn negative and undermine growth amid a slowing recovery. REGULATORY MOVES AGAINST TECH GIANTS But it is not yet clear whether the intended audience is convinced. After all, the preceding series of measures taken over the past nine months have unleashed uncertainty in stock markets, upended initial public offerings and disrupted industries. The first major sign of the forthcoming disruption came in November 2020, when Ant Group suddenly called off its planned initial public offering amid criticism from Chinese regulators. Ant was subsequently forced to separate from its main business and restructure. Chinese authorities this week have also reportedly ordered for Alipay to be broken up. But the move against Ant was just the first step by Chinese regulators, lawmakers and law enforcement agencies against Chinese tech companies and high-profile individuals.

Commentary: China’s newfound populism could hurt investor confidence

HONG KONG: Attempts by Beijing to reassure investors are growing louder.

Speaking at the China International Digital Economy Expo 2021 in Shijiazhuang on Sep 6, China’s vice-premier and economic tsar Liu He said: “China’s policy to support the private sector hasn’t changed and won’t change in the future.”

Two days later, the front page of the People’s Daily, the Chinese Communist Party’s newspaper of record, led with a commentary citing “three things that have not changed” - namely the status and role of the private economy, the government’s policy of encouraging and supporting the private economy, and China’s desire to develop a favourable environment for growth in the private economy.

Where the People’s Daily is seen as a somewhat accurate barometer of Beijing’s thinking, the message is obvious: Beijing is aware recent regulatory changes have spooked markets and wants to ensure that sentiment does not turn negative and undermine growth amid a slowing recovery.

REGULATORY MOVES AGAINST TECH GIANTS

But it is not yet clear whether the intended audience is convinced.

After all, the preceding series of measures taken over the past nine months have unleashed uncertainty in stock markets, upended initial public offerings and disrupted industries.

The first major sign of the forthcoming disruption came in November 2020, when Ant Group suddenly called off its planned initial public offering amid criticism from Chinese regulators.

Ant was subsequently forced to separate from its main business and restructure. Chinese authorities this week have also reportedly ordered for Alipay to be broken up.

But the move against Ant was just the first step by Chinese regulators, lawmakers and law enforcement agencies against Chinese tech companies and high-profile individuals.