Xi’s concerted effort to enhance oversight of monopolies is having the desired effect on China’s platform economy, the People’s Daily said Thursday.
The “disorderly expansion of capital” has been curtailed, the Party mouthpiece declared.
Indeed it has. In fact, for the first time in four years, a list of the world’s 10 largest companies by market cap no longer includes any Chinese firms. Tencent’s near $400 billion wipeout since late January knocked it to the eleven spot, below Nvidia (figure below).
Tencent’s shares are down nearly 8% in Hong Kong this week. The National Press and Publication Administration is in the process of “reassessing” new games submitted by the company in order to ensure compliance with stricter regulations released last month, sources told Bloomberg.
Last week, the South China Morning Post reported that officials were poised to suspend approvals for new online titles as part of a broad effort to protect the nation’s youth from what one state-run media outlet called “spiritual opium” in an abrasive column last month. That put Tencent back on the hot seat. Subsequently, SCMP “clarified.” Beijing hasn’t, in fact, imposed a moratorium on new online games, the paper said. Rather, Chinese regulators have merely “slowed” approvals “temporarily.” Thursday’s news flow was consistent with that.
The enhanced scrutiny will “likely slow rollouts,” the linked Bloomberg article noted. It also cited sources who said Beijing is now extremely persnickety about what gets approved. For example, zombie-themed titles may be disallowed for being “too scary” and regulators aren’t necessarily enamored with the so-called “boys’ love” theme. Earlier this month, The National Radio and Television Administration issued a sweeping decree which, among other things, suggested that what Beijing calls “sissy culture” will be discouraged going forward.
The Hang Seng dropped 1.5% Thursday. The city gauge has fallen 1% or more in every session this week.
And it’s not just tech. It’s everything. “The stream of negatives from casinos, big tech and Evergrande continues to crush sentiment,” Bloomberg’s Mark Cranfield said, adding that although “valuation metrics give the Hang Seng index relative value against global peers, dip buying has turned out to be a painful exercise for most of the past three months.” It may take a wholesale capitulation to entice long-term investors back into city shares, he went on to suggest.
Country Garden fell another 7% on Thursday. That, on the heels of two consecutive sessions of losses exceeding 8%. Wynn Macau shed another 5% after Wednesday’s brutal wipeout.
Read more: In China, High Stakes, High Drama
Notably, billionaire Joseph Lau’s wife sold $11.2 million worth of Evergrande shares last week. It was the second time she’s pared her stake in the besieged developer, whose founder is an “ally” of her husband.
As one analyst put it Thursday, summing up the situation, “an absence of positive triggers ahead of the holidays, combined with weak economic figures and a lack of good news on the liquidity side, means there’s a desire to take profits.”
Xi agrees. There is, in fact, a “desire to take profits.” Specifically, a desire to take them away from companies deemed to have too much of them.
On the bright side, National Health Commission spokesman Mi Feng said China has fully vaccinated one billion people.
I think US should take a cue from China and start putting its BigTech on the grill too
Similar thoughts – a lot of what China is doing is making sense.
The perception, at least from my Chinese colleagues, is that the CCP looked at the havoc runaway big tech caused in the USA society and said ‘no thanks’ and acted accordingly.
I think that’s about as good an idea as shooting ourselves in the head to see if we can improve our tummy ache…
I guess taking horse de-wormer to kill Covid is just as good?
Anti-malarials give you way better dreams.
No need to turn the US into a communist state. You can get a “green card”, aka a PR ID card – and be a Permanent Chinese Resident.
The list of benefits is quite long, including social services. Two in particular caught my eye.
“Being entitled to have their children receive compulsory education free of charge other than those specified by the state”.
“Enjoying the same rights, obligations and statistical attribution as Chinese citizens with regards to banking, insurance, securities, futures and other financial services in China the PR ID card.
What is big tech and why kill it? Intel? Invidia? Cisco? We can’t make enough cars because not enough chips. Appliances are hard to get because of lack of tech parts. Facebook, however, is not big tech, it’s social media. Fry ’em. They are immoral and dangerous.
Facebook is a platform, computer programs running on servers, it has no soul and cannot be immoral. The platform is no more responsible for the lies people tell on the platform than the traditional ‘soapbox’ in a public square. The problem is with people thinking that freedom of speech is freedom to lie or present ‘alternative facts’ as popularized by the last administration. I suggest following the recent Texas anti-abortion bill format and offering a $100,000 bounty on those that break rule #8 – Thou shalt not bear false witness against thy neighbor. Anyone willing to take a liar to civil court and prove that they lied can get a big payday. Anyone repeating the lie or otherwise abetting the liar could also be sued. Can I have an Amen?
I am unsure what is worse…amoral or immoral. At least with immoral they know right from wrong but choose not right. Amoral doesn’t care just like a serial killer, psychopath, narcissist, parental alienator, etc. To me, that argues for greater regulation/oversight/judicial control, not less.
If Facebook was dissolved completely, the US would be better off. There has never been a greater source of disinformation in the history of mankind.
Hear, hear!
Echoing a comment I made this morning in reply to EF:
News this morning – A quote from the Global Times that appeared in The Guardian this morning, describing one Chinese reaction to the US and UK offering nuclear submarines to Australia: “Thus, Australian troops are also most likely to be the first batch of western soldiers to waste their lives in the South China Sea.”
What’s happening now was dreaded by China watchers during the so-called “opening” phase of Chinese society and its economy. Back then, the thought that China was truly opening itself up was pessimistically imagined by some as a likely head-fake that would only result in a pivot back to a more powerful and assertive CCP.
We hoped it was an incorrect prediction. But apparently, it wasn’t. I now wonder how the Chinese evolution will wash through the remainder of the decade, especially in regard to trade with the US and the EU. I hate to sound like Slim Pickens in Dr. Strangelove, but right now I reckon we’ll all be beholden to the commies for a little while.
More like washing through the rest of this century. Who will stop them? The US spent over two trillion dollars and thousands of lives ruined to force a regime change in Afghanistan and literally, two weeks after were gone the bad guys had taken over. We couldn’t win in Korea, Vietnam, Iraq, or Afghanistan. What will be able to do to stop China? The big test will come from their takeover of Taiwan and they can do that any time they serious feel like it.
Taiwan holds claim to two little islands close to Hong Kong and that will be the first salvo
Coming soon to China – political purge against anti-party seditionists…i.e. Xi gone wild…
On Evergrande, it is reasonable to assume that other large property developers have also overextended on debt, since share prices and bond yields across the development industry are acting like it.
In 2008 we saw Bear’s failure followed by Lehman’s, and the whole zipper was about to unfasten. Washington had to launch an industry-wide bailout for the whole banking sector.
Will Beijing have to do the same for the whole property sector? I don’t have numbers handy, but seems to me that property is as large and systemic for China as banks are for the US.
The post-rescue result in the US was a more tightly and prudentially regulated banking sector, which in turn had knock-on effects on other industries including a greater role for non-bank lenders.
I’m interested in what the result will be in China of a more tightly and prudentially regulated property sector. Especially if “common prosperity” means curtailing profits in the sector, for developers and/or buyers.
Local governments rely on property development for their revenue, middle and upper income families rely on housing for their investments, banks rely on development loans, and so on.
The CCP takedown of the social tech giants has probably dominated most US stock investors’ attention until now, but Evergrande and it’s ilk may be the larger story.