Has Beijing signaled an ease to the tech crackdown?
Chinese stocks have feverishly rebounded, after Beijing signaled support for the market at a meeting on Wednesday.
Investors are scrambling to buy shares of Chinese companies after Beijing gave a slight nod to the private sector with a political meeting to encourage the markets. This happened today, following a turbulent few days for Chinese stocks and shares of Chinese companies listed in the U.S.
Hereโs a breakdown of events:
Chinese stock markets began dropping on Monday as investors fled, spooked by the Russian invasion of Ukraine, rising COVID numbers in China, and renewed regulatory rumbles in Beijing against tech firms, especially Tencent.
- The Shanghai Composite Index plunged almost 5% on Tuesday, the biggest fall since a little over two years ago, while Hong Kongโs Hang Seng China Enterprises Index sank 6.6%.
But earlier today, in reaction, the Financial Stability and Development Committee of the State Council held a meeting (Chinese, English) that signaled government support for markets and โalmost instantlyโฆturned the Chinese mainland stock markets into positive ground.โ
- At the meeting, Liรบ Hรจ ๅ้นค, a vice premier of the State Council and close economic advisor to General Secretary Xรญ Jรฌnpรญng ไน ่ฟๅนณย said that China and the U.S. “have maintained good communication and have made positive progress” when it comes to Chinese companies listed on U.S. stock exchanges, and that the “Chinese government continues to support various types of companies to list overseas.”
- Liu also said that the government should โcomplete the rectification work on large platform companies as soon as possibleโ through โstandard, transparent, and predictable regulation.โ
- The Hang Seng Tech Index surged 20%, its best day since July 2020. Shares in tech giant Alibaba also soared 27%, while Tencent jumped a record 23%.
China news, weekly.
Sign up for The China Project’s weekly newsletter, our free roundup of the most important China stories.
The pledge follows the Chinese Communist Partyโs renewed focus on stability at the recently concluded โTwo Sessions,โ the biggest annual political gathering of the year.
- At the meetings, the Party set an ambitious 5.5% growth target for 2022. This signaled โan intent to stabilize an economy facing fierce pressures from a property slump and new risks from the Russia-Ukraine war,โ per Bloomberg.
- Wฤng Yรกng ๆฑชๆด, the chairman of the Chinese Peopleโs Political Consultative Conference (CPPCC) and number four in the Party hierarchy, said that China will stick to its reform and opening-up policies, while guiding the basic economic system that strives for the โcommon development of various forms of ownership,โ per the South China Morning Post.
However, the newfound optimism is shadowed by conflicting politics on tech regulation, as some predict pushback from national security officials over data security concerns and online content.