World News

China Annual Disruption: First party, second business | Business and Economy

China’s crackdown on secrecy in 2021 has cost more than $ 1 trillion in the market capitalization of the country’s largest corporations.

Beijing’s economic boom came as officials emphasized the need to prioritize “high” growth that benefits many people by increasing domestic sales.

“Common development” is driven by sectors ranging from real estate and education to technology and entertainment, the rise in family names such as Alibaba Group, Tencent Holdings, Didi Chuxing Technology Co, and New Oriental Education and Technology Group, and re-attracting big corporate influences such as Jack Ma and Pony Ma.

The loss has left many businesses and investors wondering about the future of China’s growth and innovation.

“For companies, this means that their job is no longer to make money, but rather to contribute to organizational matters,” Trey McArver, a researcher at Trivium China, told Al Jazeera. “Where companies do not appear to be doing this, they will face immediate redress.”

Kyle Jaros, an assistant professor of international affairs at the University of Notre Dame, told Al Jazeera that the China Communist Party had made it clear that “the government can control business, not the other way around.”

“This means reducing people like Jack Ma of Alibaba to adulthood, forcing secretive institutions to bow down – like Tencent Pony Ma and Xiaomi of Lei Jun – and demonstrating that the party has the right to establish all technical and ethical principles.” .

Beijing’s “three red lines” policy seeks to restore real estate lending. [File: Udo Weitz/EPA]

Real estate

In August 2020, Beijing launched A “three red line” policy to prevent growing business owners from taking on new loans.

Considering that “houses are residential, not fictional,” the plan sought to cool down the housing market, which had grown rapidly in the last decade when imaginary purchases were common.

Debt reduction measures have been blamed for the financial crisis, with China’s two largest corporations – Evergrande Group and Kaisa – not repaying their loans. In October, a new law was enacted to ban small Chinese cities from building more than 250 feet[250 m]of houses.

“Violations are one of the major changes in Beijing’s approach to policy and financial management,” Shehzad Qazi, chief executive of China Beige Book International, told Al Jazeera.

“This includes acknowledging that China’s long-standing debt-generating strategy is now over.”

Tech Companies

In November 2020, Chinese regulators suspended $ 37bn funded by Jack Ma Ant Group.

Beijing said it had suspended what would have been the largest IPO in history to protect investors, but many analysts believe Ma’s criticism of China’s financial regulators and government banks has led to a move.

Andrew Collier, founder and executive director of Orient Capital Research, told the New York Times that the suspension could be to protect state-owned banks that pay Ant Group loans to help them increase customer credit based on their profits.

“My idea is that banks are looking for a reason to do this and give them enough time to try to apply online faster,” Collier said.

In February this year, Beijing unveiled new anti-regulatory laws. This includes measures to ensure that companies do not use algorithms that encourage users to spend more money or in a way that could disrupt public order. Alibaba, Tencent and Baidu are some of the tech giants who have been fined for downtime.

In April, administrators paid Alibaba a $ 2.8bn fine, ordering Ant Group to restructure and oversee a major Chinese bank.

Beijing has also expressed dissatisfaction with professional companies seeking foreign IPOs. In July, just days after the giant Didi launched its $ 4.4bn IPO in the United States, Chinese authorities banned the company from software stores.

The new rules require companies that have data on more than one million users to obtain pre-registration control permissions and allow regulators to block lists for national security reasons.

In August, Beijing banned children between the ages of 18 from playing video games for more than three hours each week to avoid the sport.

In September, Beijing banned cryptocurrency emissions from mining. Banks, corporations and online payment companies were banned from trading in cryptocurrencies, and fund managers were banned from investing in cryptocurrencies as assets.

The Chinese government has re-launched its state-of-the-art cloud platform, which competes with Alibaba, Huawei, and Tencent in the private sector. In Tianjin City, companies run by municipalities were asked to transfer their data from corporate employees to a government-sponsored cloud.

“The new paradigm prioritises national security concerns, especially the extent to which data is affected, and brings increased interest in social issues, such as inconsistencies that could lead to instability and threaten Party rule,” Qazi said.

Beijing has ordered private training companies not to offer courses that have already been offered in schools. [File: Tingshu Wang/Reuters]

Personal teaching

In July, China unveiled a secret curfew that it said was aimed at reducing student pressure and reducing parenting costs.

Beijing has instructed ordinary education companies to register as nonprofits and to refrain from offering courses that have already been taught in schools.

The companies were also banned from raising foreign exchange and providing training on weekends and holidays. The reduction boosted the $ 120bn market, with New Oriental Education and Technology, China’s largest private tutoring company, seeing the US-listed regional market drop by $ 7.4bn.


In August, in an effort to address what the government called “disruptive” celebrities’ culture, Beijing ordered broadcasters not to work with entertainers who were “politically incorrect” and. styles of “women” who were considered patriotic. Beijing also boosted the sales of its favorite players to rival players by banning online platforms from publishing a list of celebrities.

Ways forward

The push for “common development” could mean that over time, China will move from a “wild capitalist” to a economy driven by economic exploitation aimed at promoting Socialist culture. While the period of economic freewheeling may be over, experts believe that potential businesses will succeed.

McArver predicts that companies that provide social services, such as those that provide medical care and training, have found a better place to work, while companies that specialize in professional development are also doing well.

“Successful Chinese entrepreneurs always understand that they succeed when their business meets many criteria,” McArver said.

“It will continue to be so. Traders have moved away from areas that Beijing sees as unprofitable and which Beijing supports, such as environmental protection and high-tech manufacturing. “

Qazi said the new “will be guided by the values ​​of the Party”.

“Companies in areas where the government is prioritizing, such as technology development, where China seeks to reduce foreign dependency, are doing well,” he said.

However, tightening may force other companies to stop developing or looking elsewhere for opportunities.

“Some companies may think that a well-governed and pressured environment in which to do the work assigned to them by political parties and politics could disrupt it,” Jaros said. As a result, they may be able to reduce their chances of innovation, reduce or adjust costs, or in some cases, look at open markets outside China. “

Source link

Related Articles

Leave a Reply

Back to top button