US billionaire Ray Dalio said China’s recent regulatory moves shouldn’t scare investors off because the actions don’t signal a reversal in long-standing political trends.
Dalio said Chinese policymakers have signaled to DiDi that it may not be best to go ahead with the list and that they naturally want to deal with the data privacy issue. In the case of tutoring companies, he said, they want to reduce “educational inequalities and the financial burden on those who desperately want their children to benefit from these services but cannot afford them. by making them widely available ”.
His remarks follow the sell-off by investors of Chinese stocks due to increased regulatory oversight from Beijing. “You should also understand that in this environment of rapidly developing capital markets, Chinese regulators are developing appropriate regulations. So when they change quickly and are unclear, it causes this kind of confusion, which can be interpreted as capitalist movements, ”said Dalio.
He argued, however, that China should communicate more clearly while taking such steps. “I think it is unfortunate that Chinese policymakers do not communicate more clearly the reasoning behind their decisions,” said Dalio.
Recent crackdowns in China
DiDi Chuxing: Days After China’s Largest Taxi Service DiDi Chuxing Listed on the New York Stock Exchange, the Cyberspace Administration of China (CAC) banned the app and removed it from app stores . The Chinese government cited a customer data breach as the reason for the punitive action.
On June 30, DiDi launched its initial public offering worth $ 68 billion. It was the second highest public listing in the United States by a Chinese company after Alibaba Group Holding Limited.
In addition, Chinese authorities suspended the launch of Ant’s IPO, which was to be the highest-valued public listing of all time, in November 2020. Ant, Alibaba’s fintech arm, expected to raise $ 37 billion in the market.
Online education business: China’s State Council on July 23 banned for-profit companies from giving private lessons in core curriculum subjects. Foreign investment in these companies was prohibited. The state council also refused to issue new licenses to online education businesses and ordered all existing outfits to register as nonprofits.
Chinese officials say the measure was aimed at reducing the financial strain on parents, as the prices charged by most after-school tutoring companies were maddening.
(Edited by : Kanishka Sarkar)