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Tech crackdowns rid China of entrepreneurial capitalism



East Asia Forum


Chinese authorities have recently shifted their approach towards China’s top platform tech companies. The crackdown that began in November 2020 with Ant Group’s cancelled IPO has now transitioned into extending an olive branch. By June 2023, China’s economy was struggling and youth unemployment had risen above 21 percent.

Author: Martin Miszerak, Renmin University

Since early 2023, Chinese authorities have started extending an olive branch to China’s top platform tech companies after over two years of ‘regulatory crackdown’. The crackdown started in November 2020 with the cancellation of the initial public offering (IPO) of e-commerce giant Ant Group — an affiliate of Alibaba.

Besides Ant Group, the ‘rectification’ affected most of China’s large platform companies. Yet by June 2023, a cold was blowing over China’s economy. The post-COVID-19 recovery was faltering. Youth unemployment rose above 21 per cent.

The authorities also likely concluded that they had accomplished most of the objectives of the rectification. At the China Development Forum in March 2023, Premier Li Qiang bent over backwards to assure prominent Western CEOs that China was welcoming the private sector, both foreign and domestic.

There is no consensus among academic and journalistic commentators about the crackdown’s ‘true’ objectives. One view holds that it was a personality clash between the ‘exuberance’ of Jack Ma — Alibaba’s founder and China’s most prominent private entrepreneur — and the fundamentally Maoist orientation of President Xi Jinping.

But a focus on Jack Ma ignores the fact that essentially all platform companies underwent some form of rectification. Another view holds that it was simply a scheme to clip the wings of China’s top private companies, given Xi Jinping’s embrace of the state-owned sector. Yet data showing an increasing penetration of China’s economy by large private companies belied Xi Jinping’s alleged hostility to the private sector.

Others maintain that a ‘great’ rectification was needed to align the mission of platform tech companies with Xi Jinping’s social policy objectives such as ‘common prosperity’ and the drive against ‘disorderly expansion of capital’. But the true objective of the crackdown had little to do with regulation, as authorities’ actions went beyond what might be considered an imposition of a stricter regulation.

Regulatory rectification was only a vehicle to accomplish other objectives. The crackdown was characterised by a spate of shareholder wealth destruction. Ant Group was headed for its IPO in November 2020 at an implied valuation of US$313 billion. Yet in July 2023, Ant Group launched a share buyback at a valuation that was 70 per cent lower. The global ride-sharing leader, Didi Chuxing, conducted its New York IPO in June 2021 at a valuation of US$70 billion. After a forced delisting from the New York Stock Exchange, it is currently trading over the counter with a market capitalisation of about US$16.7 billion.

The other side of the coin was the wealth extraction from platform companies to various state-owned entities. One instrument of extraction was in the form of unprecedented fines. Alibaba was fined US$2.8 billion in April 2021 for alleged abuse of market dominance.

Another method of extraction was through ‘voluntary’ contributions to causes championed by Xi Jinping. Tencent — the global game leader and investor in many start-ups — ‘earmarked’ US$7.7 billion in 2021 to a fund dedicated to ‘common prosperity’.

Another extraction mechanism was carried out through putting a brake on platform companies’ ability to grow. Didi was barred from…

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The Latest Updates on China’s Visa-Free Policies



China has fully reopened its borders, allowing international tourism to recover. Visa-free travel policies are reinstated, and visa fees for foreign travelers will be reduced by 25% from December 11, 2023, to December 31, 2024. China and Singapore are also pursuing a 30-day visa-free travel arrangement.

China has fully reopened its borders, promising recovery of international tourism and travel. Many of the visa-free travel policies that were in place prior to the pandemic have therefore come back into effect, enabling people from a wide range of countries to visit

UPDATE (December 8, 2023): On December 8, 2023, the Ministry of Foreign Affairs released the Notice on Temporary Reduction of Fees for Applying Visa to China. According to this notice, during the period from December 11, 2023, to December 31, 2024, China shall cut visa fees by 25 percent across the board for foreign travelers. For more details, please consult with your local Chinese embassy or consulate.

UPDATE (December 7, 2023): China and Singapore are seeking to establish a mutual 30-day visa-free travel arrangement to boost people exchanges between the two countries, according to Reuters. At the time of writing, no further details have been released regarding the timeline or the eligibility, requirement, and application procedures of this new arrangement. Click here for more information regarding this mutual 30-day visa-free travel between China and Singapore. 

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at

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Analysis of UK Investments in China for 2023: Evaluating Deals, Values, M&A, and Investments



British Government underwent reshuffle with pro-China David Cameron as Foreign Minister. Possible mild rapprochement with Beijing. Analysis of UK investments in China this year reveals potential trends. Report includes unique Q1-Q3 data and predicts outlook for 2024.

By Chris Devonshire-Ellis & Henry Tillman   

With a reshuffle in the British Government and ex-Prime Minister – and generally pro-China politician David Cameron now as the UK’s Foreign Minister, there have been early signs of a potential mild rapprochement in the British governments overall attitude towards Beijing.

But before people get carried away, we can look at what investments the UK has made into China this year – as investments made while anti-China politics have tended to be the norm are typically indicative of stronger trends. In this report I include unique data that has not previously been made public, and examine the Q1-Q3 investment trends to see what may lie ahead for 2024.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at

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Ratings agency cuts China’s credit outlook



Financially strapped local governments and state-owned enterprises pose a risk to China’s future economic growth, the ratings agency Moody’s said today in a report downgrading the country’s credit outlook from stable to negative.

Growing evidence suggests that the central government will be required to shore up the debt-laden entities, creating “broad downside risks to China’s fiscal, economic and institutional strength,” Moody’s said.

Local governments are thought to have accumulated trillions of dollars of debt due to spending during the COVID pandemic and a loss of income due to a troubled real estate market.

Despite the challenges, Moody’s maintained China’s overall credit rating of A1, which it describes as low-risk though not the safest category of investment. Moody’s said the rating reflects its belief in the country’s “financial and institutional resources to manage the transition in an orderly fashion.”

“Its economy’s vast size and robust, albeit slowing, potential growth rate, support its high shock absorption capacity,” Moody’s said. 

Even so, the outlook downgrade signals some concern about China’s future creditworthiness.

In a statement, China’s Foreign Ministry said it was disappointed in the ratings change and that Moody’s concerns about its growth and financial stability were “unnecessary.” 

In recent years, through the continuous efforts of relevant departments and local governments, China has established a system to prevent and resolve the risks of local government debt,” the ministry said. “The trend of disorderly and illegal borrowing by local governments has been initially curbed, and positive results have been achieved in the disposal of local government debt.”

An employee works at a steel plant in Huaian, in China’s eastern Jiangsu province, Dec. 3, 2023. (AFP)

Moody’s projects China’s annual growth rate will be 4% in 2024 and 2025 but average 3.8% from 2026 to 2030, at which time it might drop again to 3.5%. 

Derek Scissors, the chief economist at China Beige Book, a firm that analyzes China’s economy for investors, said in an email that the downgrade was to be expected.

“It’s a recognition of long-standing conditions, not a new development,” said Scissors, who is also a senior fellow at the free-market think tank American Enterprise Institute in Washington. “I think growth will be faster than Moody’s thinks in 2024 and decelerate more than they think after that.”

Fees from local land sales account for nearly 40% of the revenue to local and regional governments. But China’s real-estate sector has been hit hard by overbuilding. One giant, Evergrande, defaulted under massive debt last year, triggering a broader real estate crisis.

Moody’s report said that “the downsizing of the property sector is a major structural shift in China’s growth drivers which is ongoing and could represent a more significant drag to China’s overall economic growth rate than currently assessed.”

Edited by Tara McKelvey

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