In A Meeting With Wall Street Ceos, China Defended Its IT Crackdown
In a meeting with Wall Street CEOs, China's top regulators justified their market-roiling assault on numerous industries, assuring them that the harsher laws aren't aimed at suffocating technology businesses or the private sector.
According to a person familiar with the talks who asked not to be identified because the meeting was private, China Securities Regulatory Commission Vice Chairman Fang Xinghai said recent actions included strengthening regulations for companies with consumer-facing platforms, as well as improving data privacy and national security. Fang defended the moves such as those aimed at the education and gaming industries as meant to reduce social anxiety.
Beijing's regulatory blitz on its greatest technology companies and other industries, as well as President Xi Jinping's goal for "shared prosperity," has alarmed global investors. Wall Street has been booming in China as the country opens its financial markets to investment banks, wealth and money managers, with billions of dollars in potential profits on the line.
QuickTake on Why China Is Cracking Down on Its Tech Giants.
The three-hour meeting of the China-U.S. Financial Roundtable on Thursday included the head of the People’s Bank of China, and executives from Goldman Sachs Group Inc., Citadel and other Wall Street powerhouses, according to people familiar with the talks. The meeting marked the resumption of the roundtable that was first convened in September 2018.
According to Fang, a heightened inspection of Chinese enterprises should not be viewed as a dissociation from US or international financial markets. He stated that Beijing is still committed to technology. On Saturday, which was a working day in China, the CSRC did not immediately respond to a faxed request for comment.
Amid a bigger sell-off, Beijing's regulatory campaign wiped $1.5 trillion from Chinese markets. Tencent Holdings Ltd., a Hong Kong-listed gaming company, lost its spot among the world's ten largest corporations by market value last week, leaving no Chinese stock on the list for the first time since 2017. The shares of Alibaba Group Holding Ltd, China’s second most valuable company after Tencent, have dropped more than 30% this year.
In July, China's State Council — the country's cabinet — said that rules for foreign listings would be amended and that companies dealing in offshore markets would be subject to increased regulatory monitoring. Chinese regulators are also exploring tighter inspection of a legally ambiguous company structure used by Chinese internet companies to seek offshore listings, with certain policy changes already in the works. All of this has increased investors' concerns about a further financial decoupling between the world's two most powerful economies.
At the meeting, Blackrock Inc.’s Larry Fink noted the need for China to ensure consistency of long-term government policy, including transparency to build trust and confidence, according to people familiar with the matter. Blackrock's spokesperson declined to comment.
According to the persons, Fink was also among the members of the US delegation who emphasised the importance of China putting in place a financial safety net for its ageing population to ensure that they are adequately cared for financially when they retire. According to the latest population figures from China, the number of citizens aged 60 and more has increased by 47 per cent in the last decade to 260 million, accounting for more than 18% of the country's total population. It is expected to nearly increase to approximately 500 million by 2050.