In late 2020,[1] the Chinese Communist Party and various Chinese regulatory bodies, under General Secretary Xi Jinping, began a regulatory spree, strengthening regulations, issuing fines, [instituting a number of reforms,] and introducing or modifying laws. Though mostly targeted at disrupting the growth of monopolistic technology companies, the government also introduced other reforms with implications for large swathes of the economy. Actions taken include the implementation of restrictions on for-profit tutoring and education companies, the refinement of existing rules for limits on minors playing online video games, and the introduction of new antitrust rules.
The stated goals of these reforms have been [among other things: "common prosperity"]. The institution of these reforms has led to turbulence in domestic and foreign capital markets and have garnered both criticism and praise from commentators in China and elsewhere.
China's government is nominally communist, but reforms under Chinese leader Deng Xiaoping in the 1980s relaxed government control of some industries, allowing for the emergence of private industry.[2] China maintains state-controlled companies, such as China Mobile,[3] and the economy operates with a high degree of state control compared to those of many western nations.
Relations between China and the United States became strained during the Trump administration and have remained strained during the Biden administration over issues such as the sovereignty of Taiwan and Hong Kong, . An ongoing trade war between the two countries has negatively impacted the economies of both countries.[4][5][6]
Chinese leadership has said the reforms aim to increase "common prosperity" in the hopes of shrinking the country's income and wealth disparities.[7] Additionally, regulators in the country have become wary of the power possessed by internet companies and. for self reliance.[8]
For the social good.[9] Less need to rely on foreign capital and less need to cater to how actions look overseas.[10]
Various reasons have been put forward to explain the timing of the regulatory spree. The 20th National Congress of the Chinese Communist Party will occur in 2022. During the Congress, members will be appointed to the country's Central Committee. This timing has led to speculation that Xi is committing a [power grab] or at least [shoring up power]. Xi [eliminated term limits] etc etc.
The change to preventing IPOs and foreign listings represents a departure from the policies of the past, which [almost encouraged such IPOs].[11] Xi has spoken about more closely orienting the tech sector [rephrase] to conform with state goals and expectations in 2016 and 2018.[11]
[redo a bit with more context] Ant Group, a Chinese technology-enabled financial company majority-owned by its founder,[13] Jack Ma, and affiliated with Ma's other major holding, Alibaba, began taking steps toward an initial public offering in 2020.[14] Ant Group operates a number of lines of business, including Alipay,[15] an online payments platform, Zhima Credit, a credit scoring program, and Yu'e Bao, a money market fund. Ant Group intended to raise $34 billion through the IPO process.[16] This would have been the largest such offering by any company to date, above the $29.4 billion raised by Saudi Aramco as a result of its 2019 offering.[16]
Due to Ant Group's scale—the company has approximately one billion users in China—and its operations, which include lending services, the company has attracted regulatory scrutiny in the past.[17] The China Securities Regulatory Commission previously imposed new restrictions on money-market funds, a move attributed to the size and growth of Yu'e Bao, an Ant offering.[18] Though the company asserts it does not function as a bank or a financial institution,[17] Chinese banks have voiced their belief that Ant draws deposits away from them, so undermining the banking system.[17] The People’s Bank of China requested data from banks that lent through Ant in mid-2020 and the State Administration for Market Regulation informally began an investigation earlier in the year into whether Alipay and WeChat Pay, a Tencent subsidiary, had abused their size to hamper competitors.[19]
Several days before the IPO was to take place, the company's founder and controlling shareholder, Ma, made negative statements about Chinese regulators and the governing political party, the Chinese Communist Party.[20] Ma criticized regulators for their focus on risk mitigation.[21] Soon after the comments were made, Ma and other senior Ant executives were summoned to a meeting with the China Securities Regulatory Commission, the China Banking and Insurance Regulatory Commission, and the State Administration of Foreign Exchange as well as representatives from the country's central bank, the People’s Bank of China.[22] Ant Group issued a statement disclosing that the Ant and government representatives discussed "Views regarding the health and stability of the financial sector".[23]
After the meeting, and two days before the IPO was set to occur, the offering was suspended by the Shanghai Stock Exchange; the Shanghai Stock Exchange referenced "major issues" as the reasoning behind the suspension.[24] The exchange further indicated that the company no longer conformed with listing requirements.[25] Ant subsequently suspended the Hong Kong listing.[25] The Wall Street Journal attributed the suspension to the personal will of Xi, who had become infuriated by Ma's comments, citing "Chinese officials with knowledge of the matter".[20] The suspension was unexpected, and has been referred to as "abrupt"[26], [and more]. Ant began working to address regulator concerns in January 2021,[27] though as of September 2021 no public plans for an IPO by the company had been announced.
Jack Ma retreated from the public eye after the IPO's suspension [source]. He did not appear in public between October 2020 and January 2021, when he appeared in a live-streamed video.[28] In the video, he discussed his commitment to philanthropy and improving quality of life for those in rural China.[28]
Soon after the suspension of Ant's IPO, Chinese regulators introduced drafts of new anti-monopoly guidelines directed at large technology firms.[26] These rules were formalized as guidelines for companies in February 2021 by the State Administration for Market Regulation.[29] These newly instituted rules include banning online retailers from presenting different prices to different consumers based on data collected about them[30] [and other such rulings and rules]. [Companies promise to follow these in April 2021].[31]
In December 2020, the Politburo of the Chinese Communist Party emphasized that it would stand against monopolies after a meeting to discuss its 2021 economic plans and outlook.[32]
In March 2021, Xi called for the "acceleration" of the introduction of laws for "platform" companies.[33] Between November 2020 and the end of July 2021, Chinese regulators [did more than 50 things].[34]
Didi, a [prominent ride-hailing] company, has faced scrutiny from Chinese authorities since March 2021.[35] Unlike Ant, Didi filed for its IPO in the United States.
Main article: Three-child policy |
China modified its longstanding one child policy in 2016 and allowed couples to have two children.[36] The policy was updated again in 2021, allowing couples to have three children. This modification to policy was announced on 31 May 2021 at a meeting of the Politburo of the Chinese Communist Party].[37][38] The policy went into effect in August 2021.[39]
Main article: Evergrande liquidity crisis |
The State Council of the People's Republic of China and the Central Committee of the Chinese Communist Party together released a five-year plan outlining plans for regulations and updated laws in August 2021.[40] The plan calls for the continued introduction of rules and reform governing portions of the economy including the technology sector, finance, and defense.[41]
China has no tax on inheritances, [someday].[42]
Li Guangman published an article in late 2021 praising the reforms as a "profound revolution".[43]