Beijing’s actions have returned knots to all too many investors’ stomachs.
After 11-plus years watching Xi Jinping operate, global investors have learned to watch what China’s leader actually does, not what he says.
Consider, for example, how Xi’s team spent the homestretch of 2023 talking big about revitalizing the reform process and championing private-sector innovation. Xi spoke the language of foreign funds keen to ride China’s economic rise. Yet that was before his government’s actions returned knots to all too many investors’ stomachs.
Just 10 days before year end, Beijing rocked markets with draft guidelines intended to limit consumption on online gaming. It was the latest perceived attempt by Chinese policymakers to maintain control of the virtual economy. In doing so, investors came away fearing that Xi and his team learned little from the tech crack crackdowns of recent years.
“The rules looked like a rerun of the regulatory crackdown of 2021, because of their draconian restrictions on the types of spending that drive much gaming revenue and led to a sharp selloff in major gaming companies,” says Andrew Batson, analyst at Gavekal Dragonomics. “But it is not the details of the rules that are the main issue. It is that the aggressive intervention came after months of what seemed to be supportive government rhetoric toward the internet sector.”
It’s a reminder of how China is likely to stress-test the global economy as never before in 2024, and a moment of maximum anxiety for Asia.
Though Batson points to 2021, the real original sin on this tech narrative was November 2020. That’s when China’s government went after China’s most influential tech founder: Jack Ma of Alibaba Group fame.
