China’s Communist Party urges ‘orderly’ capital development after year of regulatory crackdown
- A People’s Daily commentary suggests that the management of capital will remain a central national goal this year
- The government is urged to establish ‘traffic lights’ to prevent the ‘barbaric’ growth of capital
The Chinese Communist Party is escalating its call for the “orderly development of capital” after a year of intense regulatory crackdown on multiple sectors, as Beijing sharpens its focus on stability in this year’s economic plan.
China should “support and guide” the healthy development of capital, and prevent the “barbaric growth of capital”, an opinion piece in the party mouthpiece People’s Daily said on Tuesday.
The commentary aimed to explain ideas brought forward by the country’s top leadership during the annual Central Economic Work Conference in December, according to the newspaper.
At the event, officials declared stability a national priority, and discussed the “correct understanding” of the characteristics and behavioural patterns of capital, among other topics.
The article reflects the overriding concern of China’s leaders, who initially directed government bodies to check the disorderly expansion of capital during the same economic meeting in 2020. The following year, regulators took a wide range of actions to rein in the technology, off-campus tutoring, property, and entertainment sectors, wiping out more than US$1 trillion of market value from Chinese company stocks.
The People’s Daily said that efforts to prevent the disorderly expansion of capital have seen initial results, and the order of market competition is improving. The article added that preventing the “barbaric growth of capital” does not mean that China is against capital.
The commentary also called on the government to set up “traffic lights” for capital development, an idea that was first put forward during last December’s top economic meeting without elaboration.
According to the People’s Daily, efforts to establish a “traffic light” mechanism involves refining a blacklist to manage market access, strengthening market regulation, and cracking down on monopolistic and anticompetitive behaviours.
The newspaper said that the goal of managing capital is to “guide and urge companies to obey the party’s leadership”, serve the economy and the “big picture” development of society, as well as encourage companies to “play a positive role” in technological advancement, people’s livelihoods, and international competition.
“We believe this suggests regulatory curbs on the internet sector will stay in place, but they are likely to become more rules-based, with fading uncertainty as the regulatory framework takes shape,” said Bruce Pang, head of strategy and macro research at China Renaissance Securities in Hong Kong.
“We expect Big Tech to see strong and effective supervision, regulation and guidance, rather than a suppressive crackdown,” he said.
Author: Xinmei Shen, SCMP