In-Depth

by Malcolm Riddell

China's Tech Crackdown
1

'The most significant philosophical shift since Deng'

Reuters

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Tom Westbrook | Reuters
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August 1, 2021
'The most significant philosophical shift since Deng'
'The most significant philosophical shift since Deng'
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Tom Westbrook | Reuters

China's Tech Crackdown

1

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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China's Tech Crackdown
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China's Tech Crackdown: 'Nobody Saw It Coming.' — Huh?

‘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,’ writes Reuters’ Tom Westbrook.
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China's Tech Crackdown
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'Why China Is Cracking Down on Its Technology Giants'

‘Why, you may ask, is China crushing some of its most innovative unicorns? We’re in a new era led by President Xi Jinping, and politics are in command.’
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'Xi's Four Pillars of Regulation'

‘Broadly, Beijing is concerned about four pillars of stability: banking, anti-trust regulation, data security and social equality. All of Beijing’s major interventions reflect these concerns.’
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'Stock Market: China Doesn’t Care How Much Money Investors Lose'

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Tom Westbrook | Reuters
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1

'The most significant philosophical shift since Deng'

‘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.’
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‘Why do business and political leaders in the West persist in getting China so wrong?’

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What the West Gets Wrong About China
1

Part 1 | ‘Why do business and political leaders in the West persist in getting China so wrong?’

‘Why do business and political leaders in the West persist in getting China so wrong?’
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What the West Gets Wrong About China
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Part 2 | ‘Myth 1: Economics and Democracy Are Two Sides of the Same Coin'

‘The truth, then, is that China is not an authoritarian state seeking to become more liberal but an authoritarian state seeking to become more successful—politically as well as economically.’
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Part 3 | ‘Myth 2: Authoritarian Political Systems Can’t Be Legitimate’

‘A Marxist-Leninist system is concerned not only with economic outcomes but also with gaining and maintaining control over the system itself.’ ‘That has huge implications for people seeking to do business in China.’
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Part 4 | ‘Myth 3: The Chinese Live, Work, and Invest Like Westerners’

‘For much of its turbulent modern history, China has been under threat from foreign powers, both within Asia (notably Japan) and outside it (the UK and France in the mid 19th century).’ ‘China’s rulers, therefore, see foreign engagement as a source less of opportunity than of threat, uncertainty, and even humiliation.’
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‘Censorship, Surveillance and Profits: A Hard Bargain for Apple in China’

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Apple in China
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'Tim Cook and Apple Bet Everything on China.'

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Apple in China
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'Apple in China: No Plan B'

“This business model only really fits and works in China. But then you’re married to China.” ‘The Chinese government was starting to pass laws that gave the country greater leverage over Apple, and Mr. Xi would soon start seeking concessions. Apple had no Plan B.’
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Apple in China
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'Apple Reaches $2 Trillion'

“This business model only really fits and works in China. But then you’re married to China.” ‘The Chinese government was starting to pass laws that gave the country greater leverage over Apple, and Mr. Xi would soon start seeking concessions. Apple had no Plan B.’
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