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'The most significant philosophical shift since Deng'

Reuters

Malcolm Riddell

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Tom Westbrook | Reuters

'The most significant philosophical shift since Deng'
'The most significant philosophical shift since Deng'
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China's Tech Crackdown
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BIG IDEA | ‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders and regulatory changes rip apart the old playbook. According to some analysts, it is the most significant philosophical shift since former leader Deng Xiaoping set development as the ultimate priority 40 years ago.’

Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders and regulatory changes rip apart the old playbook.’

  • ‘Stocks and sentiment have taken a drubbing as Communist Party rulers seek to remake the property, technology and education sectors to curb cost pressures and better serve ordinary people.’

‘The new model appears to place common prosperity, as President Xi Jinping has put it, ahead of helter-skelter growth.’

  • ‘Zhaopeng Xing, senior China strategist at ANZ, said the raft of policies, unveiled around the Chinese Communist Party's centenary, underscores the political will to reinforce the Party's roots.’
  • ‘ "These policies were announced to reflect the Party's progressiveness" and appeal to the masses, Xing said. "They send a message that China is not a capitalistic country, but embraces socialism." ’

‘ The messaging in the months running up to the Party's July 1 centenary was also unequivocal, analysts say.’

  • ‘ "Common prosperity" is the over-riding long-term goal, Xi said early this year, and China's development should be centred on people's expectations of better lives, urban-rural gaps and income gaps.’
  • Note: ‘The top 10% of families in China account for 47.5% of household wealth, the IIF estimates.’

‘According to some analysts, it is the most significant philosophical shift since former leader Deng Xiaoping set development as the ultimate priority 40 years ago.’

  • ‘ "Chinese entrepreneurs and investors must understand that the age of reckless capital expansion is over," said Alan Song, founder of private equity firm Harvest Capital. "A new era that prioritises fairness over efficiency has begun." ’

‘ "Over the past 20 years, Chinese authorities could turn a blind eye to some illegal business practices, tax evasion or wrongdoings, because the economy enjoyed robust growth," said Ming Liao, founding partner of Beijing-based private equity firm Prospect Avenue Capital.’

  • ‘Now that the economy is slowing down "the question becomes how to divide the cake. Thus the need to weigh fairness against efficiency." ’

‘Housing, medical and education costs were the "three big mountains" suffocating Chinese families and crowding out their consumption, said Yuan Yuwei of Olympus Hedge Fund Investments.’

  • ‘ "This is the most forceful reform I've seen over many years, and the most populist one. It benefits the masses at the cost of the richest and the elite groups," Yuan said.’
  • Note, regarding education cost: ‘A2019 survey from recruitment firm 51job Inc showed nearly 40% of parents spent 20-30% of their income on children's education.’

‘As the Party prepares for a 20th national congress, which will decide if Xi remains its general secretary for an unprecedented third term, analysts think he will press on with his pillars for reform, one of which is a thriving middle class.’

  • ‘The Party seems determined to emphasise its socialist roots and contrast them against a perception of social problems in capitalist centres such as Hong Kong.’
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