After Chinese President Xi drew attention to income inequality, the eyes were turned to technology giants. On the other hand, the situation may not be just about income justice.
Undoubtedly, one of the most talked about countries in the world in recent years. Chinese. As the Asian country became economically stronger, it began to increase its political and cultural influence. One of the locomotives of this effect was technology investments.
It is stated that the next target of consecutive market regulations in China may be technology giants. This is causing tension in markets both within China and the rest of the world. Chinese President Xi‘s latest statements also affect this tension.
Can tech giants go public?
To understand China’s current situation, it is necessary to look at the country’s past. Mao During his period, an absolute communist rule was dominant in the country. Afterwards, partial enrichment began in the country gradually. Deng Xiaoping in the period “It is honorable to be rich” Along with this understanding, the Chinese people also started to take steps to enrich themselves.
Some cities in China capitalism It can interact and is compatible with the system found in capitalist countries. Still, most of the country is governed by the communist regime. The strict censorship and control policies implemented by the country and the extremely centralized system reinforce this situation.
Recently, the situation in China has changed. China, which in the past was considered a source of cheap labor as a poor country, is now middle class succeeded in becoming a country. Xi also thinks that the resources collected in the rich people of the country should be spread to the public. One of the reasons for this situation is the possibility of empowered individuals to cause problems for the party administration.
money power relationship
Both domestically they hold capitalTechnology giants are on Xi’s radar because of their influence outside the country. According to analysts, the power in the hands of these people is the same as that of China’s administration. communist party a risk for In recent years, names such as Alibaba, TikTok, Tencent have been among the remarkable names coming out of China.
No matter whether China’s next target will be the tech rich, the tech giants in the country have already started to take some steps. Not 24 hours had passed since Xi’s statement last week. Tencenthas pledged to allocate approximately £5.6 billion in funding to create “general welfare” in the country. At the beginning of this month, the company announced features that limit the game time of young people. The reason for this move was that state media organs described the games as “spiritual opium”.
Companies have less room to maneuver
The market value of Chinese firms is also being affected as the government’s approach becomes tougher in the Asian giant. Total depreciation of Chinese firms as a result of pressure from governments on both sides of the Pacific Ocean 1 trillion dollars has exceeded the threshold.
In the list, which is called the Golden Dragon Index and includes the 250 largest companies of China that are traded abroad, the total loss of value has reached 50 percent this year. Large companies of the country such as Didi in foreign markets it is generally a reservation that they are faced with strict restrictions or even directly blocked as soon as they are opened for processing. Some argue that China should decide on this issue, while others argue that China has fulfilled its regulatory role.
Not only companies affected
Firms are just one of those affected by the distribution of wealth in China. For people, the situation seems rather complicated. Alibaba founder criticizing China’s restrictions Jack Ma disappeared for three months. and caused great tension.
The founder of ByteDance, the owner of TikTok, also said, “reading a book and dreamingColin Huang, the founder of the e-commerce platform called Pinduoduo, was also dismissed from his position at the company.
There is still an international fight for this
Chinese companies abroad, especially in the US stock markets It is not very welcome for China to be traded. Because a law passed in the USA requires companies listed on the country’s stock exchange to open their accounting records to US auditors and authorities within three years at the latest. This regulation, which started in the Trump era, continues in the Biden era.
In contrast, China passed a new law and companies from opening their accounting records to foreign auditors without prior authorization from the legal authorities. This means that they can prevent companies from being audited at any time.
For the average investor, this poses a risk. Let’s say you bought a share of a company and that company was removed from the stock market because it couldn’t share its accounting records for 3 years. You would be left with stocks in your hands. This risk also includes those who will invest in Chinese companies. scares.
It seems that China’s domestic policies will continue to be discussed for a long time. What do you think about this?