"Shares in Tencent plunged 9.0% in Hong Kong on Tuesday amid widespread market jitters over Chinese regulatory crackdowns on high-growth sectors, including online platforms and, most recently, private tutoring. Hong Kong's benchmark Hang Seng Index (.HSI) fell 4.2%."
Fascinating how the Chinese authorities seem to be regulating the these companies with complete disregard on how the stock market might react.
> with complete disregard on how the stock market might react.
I personally regard this as a positive fact, and I'm generally against the policies of the current Chinese authorities. The stock market should not be the be-all and end-all of our modern society.
Does it make sense to have strong principles and not be guided by financial incentives alone? Sure. But would it make more sense to have a solid regulatory framework to start with, as opposed to being loosey goosey for a very long time and then course correcting in a way that evaporates billions in value overnight from domestic and foreign investors?
Countries and companies have a lot in common. Consider this analogy: would you want to join a company that has an excellent business model and is poised for strong growth, but the CEO is a nut case and has done several mass layoffs that have completely blindsided internal and external people?
I, for one, am happy that China is tripping over itself and will give us a bit more room to breathe and figure out our own mess, so that when the inevitable takeover of Taiwan and all the other shit storms happen in the future, we'll be at least a tiny bit more prepared.
It's bad because the "stock market" that people focus on are typically indices of only the largest companies, such as the S&P 500 and Nasdaq. If the concern is around performance of these particular indices, it can lead to more policies that favor large business at the expense of the small.
Naively, it looks like the CCP sees the influence and heft US tech exercises on the US population and world at large.
The CCP will forgo economic might (in this sector) for social stability and control every time. They do not want these titans to have more power or influence than they have so they rein them in and let them know who holds the straps.
The problem is that the CCP has nothing to replace this cultural vacuum with. They want to legislate a return to "old" (post 1949) values by banning foreign tutors, suppressing dissent on WeChat and Weibo, and doing generally authoritarian shit to encourage nationalism. Meanwhile, young, educated people almost exclusively consume the cultural products of the West, Korea, and Japan. And they find the North Korean style propaganda embarrassing. The disconnect really cannot be understated.
I don't think this is so naive. Jack Ma, for example, disappeared last year shortly after a speech where he called the finance regulators incompetent and tried to use his fortune to bypass them. What probably scared the Chinese government is that he got close to getting away with it. If I recall correctly, that was the flash point for the Chinese Big Tech crackdown.
It is simple rule of authority system, not rule of law system. The only way to win is to give the party members enough shares or bribes so that they like you and see you as the member of the club. Chinese authorities are especially thin skinned and will see moves like this also as the win against any criticism.
Social stability IS econimic power in the long term. Any anti-trust enforcement of that sort is beneficial for the overall market, even if the largest business in that sector will suffer. Short term economical metrics really don't and shouldn't matter that much to a well functioning economy.
By reining in large corporations which may optimize for their own profits over social good and even economic competition may result in stronger long term economic might.
I think that may be part of the point. In matters of state, in China, markets react to policy not the other way around. In the west markets direct policy through a kind of indirect or virtual parliament.
Whether China's approach is wise or not...I don't know.
That's absurd that they shouldn't pay ANY attention. You can go too far in both directions. The stock price is an indirect indicator of the material impact of the regulation.
> Fascinating how the Chinese authorities seem to be regulating the these companies with complete disregard on how the stock market might react.
I mean, that's fairly normal, surely? _Any_ aggressive regulatory action is going to upset the stock market; it regulatory bodies had to take the stock market's delicate feelings into account they might as well shut their doors.
We (the west) may see this as shocking, but I believe this isn't equivalent to the U.S. gov't doing something that would crash the NYSE or NASDAQ. If the Chinese gov't did something that undermined real estate value, where most Chinese citizen's savings are parked, that would be more comparable.
Don't think the Chinese government cares about purchasing any Chinese company's stock at a discount, if the need arises they can of course nationalise it almost on the spot.
I think they do it because information (and control over that information) is more valuable to them in the long run than whatever economic/financial gains they might sacrifice.
>Fascinating how the Chinese authorities seem to be regulating the these companies with complete disregard on how the stock market might react.
The stock market reaction is a part of the show. They aren't banning things despite it, they are actually flexing to show authority (albeit in a crude manner).
Last time I checked, plenty people on HN claiming those enterprises are branch of the government `since they operate in China`, which I still do consider to be one of the most ignorant and arrogant comment on Chinese businesses.
If governments can actually be that successful in dicating and operating businesses, then the communism world would never have failed so miserably, the control the Chinese government has over companies is really no more than that of the United States governments (from federal to local), just look at how the federal governments banned all kinds of business activites, how the `do no evil` company bidding for defense contract. It's a pity many of the readers live in the imaginative world where the US is free of all evils, with China being the opposite.
The stock market is just a facade, a theatre, to appear to the West that Chinese economy is somewhat legitimate. In reality everything is in CPC hands and all these companies only appear to be private.
There seems to be a lot of misunderstanding in this thread that there can be chinese companies that are somehow separate from the government. All chinese companies are defacto part of the government. The CEO of all chinese enterprises is Xi Jinping.
No idea why you’re being downvoted. This is 100% correct, China requires party members to be on the boards of companies and Xi is the head of the party.
Only some companies… logically assess what you are saying: for all business, government has board representation!? How would that scale? Where would the government get that kind is workforce?
Not saying its true but this is the reason a lot of people suspect the same thing is happening in the US under the guise of diversity organizations that suddenly started popping up in most major corporations over the last few years.
But they aren’t. Most companies have no direct influence from the government (outside of regulation). Just the big ones… which is pretty similar to the US.
WeChat registration was a fascinating experience. You download the app and then someone who is already in the system has to verify you via QR code scan. That's how it was when I visited a couple years ago, at least.
Not necessarily "China phone number". I live in Malaysia and WeChat is very popular here, even among Malays. One Malaysian friend vouched for my account.
The Chinese government also forced a removal of WeChat from online stores in China.
Consensus in some quarters is that a Maoist crackdown akin to the cultural revolution may be starting up.
Other companies have been hammered such as all cram schools have been "told" they will not only not be allowed to issue stock (IPO) but possibly no longer allowed to be for-profit but must be non-profit now.
If you ever tried using WeChat you’ll find that signing up was already a ludicrous experience. I contacted several other WeChat users who tried to vouch for me in South East Asia and none of the accounts were good enough for WeChat. Absolute nonsense.
Under the CCP, the "rights" pendulum swings wildly for society and the economy. Some policies and edicts seem well thought out, others seem impulsive and extreme with little regard to long-term consequences or the impact on China's people.
100 flowers/Great Leap Forward. Cultural Revolution/Deng reforms. Tiananmen/hypernationalism.
Tech has enjoyed a relatively open hand for two decades. Now the fist is closed and comes smashing down. Justification for clampdowns, crackdowns and purges are really about CCP leaders using all tools at their disposal to maintain a hold on power.
So by comparison we are taking the highly successful policies of Reagan and Nixon… perhaps with the Japanese internment camps and dropping nuclear weapons thrown in? (For a similar time period in the US)
How many native Chinese don’t have WeChat already? WeChat has 1.2B users. China has 1.4B people. I suspect the rest are too old or too young. Basically, it’s impossible to operate in a city without it.
Looks like tech will inevitably one day circumvent all the barriers China has set up. It seem there is a panic with in the govt as they notice the trend. Delays the inevitable, but for how long?
I remember when the "great firewall" seemed like a joke, as did digital copyright compliance, online censorship or basically any means of controlling the internet. Information wanted to be free, and neither man nor king could stand in its way.
Maybe that is true, and the last 15 years have been an aberration. But... that would mean a reversal of a trend, not a continuation of the current one. To me it seems likely (careful with inevitabilities) that the internet will increasingly become a way of controlling people.
The problem is excessive centralization. The internet used to be millions of servers owned by independent people and organizations. That was, for all intents and purposes, uncontrollable. Now much of the internet is comprised of giant platforms that are a whole lot easier to coerce to comply with even most nonsensical regulations.
based on trends of Western companies bending over backwards to fulfil China's whims, I'd say the odds are more likely this gets exported around the world
Readit News
Fascinating how the Chinese authorities seem to be regulating the these companies with complete disregard on how the stock market might react.
I personally regard this as a positive fact, and I'm generally against the policies of the current Chinese authorities. The stock market should not be the be-all and end-all of our modern society.
Countries and companies have a lot in common. Consider this analogy: would you want to join a company that has an excellent business model and is poised for strong growth, but the CEO is a nut case and has done several mass layoffs that have completely blindsided internal and external people?
I, for one, am happy that China is tripping over itself and will give us a bit more room to breathe and figure out our own mess, so that when the inevitable takeover of Taiwan and all the other shit storms happen in the future, we'll be at least a tiny bit more prepared.
when stocks are up they feel richer and spend more money at stores etc.. (the wealth effect)
whether or not you agree with this approach, the fed and congress care alot about the stock market for good reason.
i just wish it wasn’t all they cared about
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And a repressive Communist government should be?
The CCP will forgo economic might (in this sector) for social stability and control every time. They do not want these titans to have more power or influence than they have so they rein them in and let them know who holds the straps.
Centralized power is good (if that's what you want, and it seems like that's the MO of the CCP).
They just need to control it.
They should want Tencent to take over the world - with them in complete control of Tencent (which they basically already are).
Why should the CCP afraid of Tencent getting big instead of trying everything they can to make Tencent and ByteDance etc bigger?
Whether China's approach is wise or not...I don't know.
Yes various interests lobby the government all the time. But what are the best/clearest examples of the market tail wagging the policy dog?.
I mean, that's fairly normal, surely? _Any_ aggressive regulatory action is going to upset the stock market; it regulatory bodies had to take the stock market's delicate feelings into account they might as well shut their doors.
China's semiconductor company spiked today on the stock market.
Or does this regulation lower the price so institutional investors get a discount?
1. the og investors cashed out. leaving retail holding the bag.
2. they buy the stock at a discount
Even better, they're intentionally redirecting finances away from companies they don't like.
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The stock market reaction is a part of the show. They aren't banning things despite it, they are actually flexing to show authority (albeit in a crude manner).
If governments can actually be that successful in dicating and operating businesses, then the communism world would never have failed so miserably, the control the Chinese government has over companies is really no more than that of the United States governments (from federal to local), just look at how the federal governments banned all kinds of business activites, how the `do no evil` company bidding for defense contract. It's a pity many of the readers live in the imaginative world where the US is free of all evils, with China being the opposite.
The stock market is just a facade, a theatre, to appear to the West that Chinese economy is somewhat legitimate. In reality everything is in CPC hands and all these companies only appear to be private.
Dead Comment
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China’s Millionaires Visit Communist Revolution Sanctuary Clad in Military Uniforms of the Era
https://japan-forward.com/chinas-millionaires-visit-communis...
Even Hong Kongers couldn’t register Americans at the time.
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Dead Comment
Consensus in some quarters is that a Maoist crackdown akin to the cultural revolution may be starting up.
Other companies have been hammered such as all cram schools have been "told" they will not only not be allowed to issue stock (IPO) but possibly no longer allowed to be for-profit but must be non-profit now.
https://www.newsdirectory3.com/china-bans-cram-school-busine...
https://www.bloomberg.com/news/articles/2021-07-23/china-is-...
100 flowers/Great Leap Forward. Cultural Revolution/Deng reforms. Tiananmen/hypernationalism.
Tech has enjoyed a relatively open hand for two decades. Now the fist is closed and comes smashing down. Justification for clampdowns, crackdowns and purges are really about CCP leaders using all tools at their disposal to maintain a hold on power.
So by comparison we are taking the highly successful policies of Reagan and Nixon… perhaps with the Japanese internment camps and dropping nuclear weapons thrown in? (For a similar time period in the US)
It's not like the world is static.
I remember when the "great firewall" seemed like a joke, as did digital copyright compliance, online censorship or basically any means of controlling the internet. Information wanted to be free, and neither man nor king could stand in its way.
Maybe that is true, and the last 15 years have been an aberration. But... that would mean a reversal of a trend, not a continuation of the current one. To me it seems likely (careful with inevitabilities) that the internet will increasingly become a way of controlling people.