China’s Big Tech companies have been brought to heel with state-ordered overhauls of their businesses with regulations and mandates, such as requiring approval for future initiatives and growth-capping, tipping the balance of power back to the Communist Party (1).
Contrary to appearances, it does not seem to be an attempt to quash innovation or (entirely) diminish economic benefits, but rather to avoid the undue influence which modern ”internet-capitalism” has afforded to western Big Tech (2) —great for China, but less so for investors who bet on these stocks (3). The current ”discount”, however, provides an interesting buying opportunity in the Chinese general markets, with interesting valuations, especially when compared to the US (4).
China is also addressing the wealth gap issue with tax and salary-capping initiatives, as they usher in a renewed, yet Chinese-adapted, emphasis on socialism, with a narrative of common prosperity (5), and an aim to expand the middle class (6).
References
Jack Ma ”Behaved Too Much Like An American Entrepreneur” For The Chinese Communist Party’s Liking
Tencent Shares Tumble As WeChat Removed From Chinese App Stores
Hedge Funds Dumped Chinese Stocks At A Record Pace, Setting Stage For A Furious Rebound
President Xi Calls For ”Redistribution Of Wealth” To Help ”Expand The Middle Class”