China’s Clampdown On Tech Firms And The Risk It Poses For Investors

China’s Clampdown On Tech Firms And The Risk It Poses For Investors

Gold coin with the symbol of the Chinese yuan is clamped in the clamp. Financial concept. Isolated. ... [+] 3D Illustration One of the hallmarks of China's economic miracle was the willingness of Deng Xiaoping and his successors to allow China's communist system to evolve into a more market-oriented model in which private businesses coexist alongside state owned enterprises (SOEs). However, since Xi Jinping became China's leader in 2012, he has taken steps to reverse the trend. In the process, the role of SOEs has increased while private companies face growing restrictions, especially in the technology arena. Until recently, global investors seemed oblivious to what was happening. Last November when the Chinese authorities cancelled the IPO for Ant Group that was spun off by Alibaba a decade ago, investors viewed it as a one-off reprimand for Alibaba's founder Jack Ma. (He had referred to the "pawn shop" mentality of China's banking system in a public forum.) This was followed by Alibaba being fined a record $2. 8 billion for alleged anti-monopoly violations. This past month, however, international investors became concerned by the government's crackdown on several leading tech companies and companies that raise capital offshore. According to the Wall Street