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Investors Have Lost Over $400 Billion in China in 2021

Tras ola de regulación del PCCh, inversionistas pierden más de 400,000 millones

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Investors have lost more than $400 billions in China over the past half year. Many of them are wondering whether it still makes sense to invest in the Asian giant or whether U.S. capitalists’ money would be better spent in other Asian markets.

Pension funds, banks and other financial institutions are considering or have already withdrawn some of their capital from China following the Xi Jinping regime’s controversial decision to begin a regulatory crusade against private education in the Asian country.

Chinese regulators warned private education institutes and companies in China that they will have to start operating as non-profit institutions to remain in the Chinese education sector.

Inversionistas han perdido más de $400,000 millones en China
Education companies under China’s new regulatory framework will be reduced to non-profit institutions. (EFE)

Private education in China moves more than $120 billion a year. News of new regulations on private education prompted a massive sell-off of companies investing in the education sector, such as TAL Education Group or Gaotu Techedu.

Beijing has said that the new regulations are meant to rescue a sector “hijacked by capital”. These regulations prohibit companies that invest in education from distributing profits, listing on the stock exchange or raising capital for investment, essentially turning them into non-profit organizations.

The Chinese Communist Party’s other crusades against the private sector

This is not the only regulatory crusade Beijing is leading. Food delivery services will also be regulated and the Communist Party of China (CPC) has already indicated that delivery drivers of digital platforms providing this type of service in China must be guaranteed a minimum wage.

Other apps such as DIDI, which are used to hire a transportation service, have also been temporarily blocked. Beijing’s new restrictions imposed on this company prevent new users from downloading the app for use, which will prevent the company from growing and expanding in China.

CCP technocrats are also leading a regulatory crackdown among internet giants such as Alibaba. Earlier this year the company had to pay more than $2.8 billion in an “anti-monopoly” fine imposed by Xi Jinping’s regime. The company’s owner, Jack Ma, has already had several run-ins with the Chinese regime.

Inversionistas han perdido más de $400,000 millones en China
Ant Group and Alibaba, Jack Ma’s two companies, have been in the crosshairs of Chinese regulators for some time. (EFE)

The most talked-about case is the blocking by Chinese regulators of the IPO of Ant Group, Ma’s other company. The financial group, which has managed to register more than one billion users on its platform, came under scrutiny after Ma made comments about China’s onerous regulation of the financial sector.

The Chinese regime forced Ant Group into a major restructuring, arguing that its financial technology business model represents a form of unfair competition to traditional Chinese banks.

Chinese regulators are working with Ant Group to agree on a possible exit for Ma from his own company, which would involve divesting his stake in Ant Group to another business group or investor in the interests of the CCP.

The regulatory horde unleashed by the Chinese regime is intended to strengthen the CCP’s control over the private sector in China. The new regulations will elevate the government’s influence over China’s private sector and drive many investors to pull their money out of China.

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica

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