China Briefing | Will China learn its US$1 trillion lesson from the stock rout and be more transparent? The signs are still unclear
- A spate of unexplained regulatory moves against tech and education firms has not only put off top global investors like SoftBank, it has even led to speculation that China has had a change of heart on opening up and resisting decoupling with the US
- It appears these were unintended consequences. If so, officials should reflect on how they can avoid a repeat of this mess. Holding public hearings on policies of major domestic or international impact would be a good first step
“What’s going on?” That is one of the most frequently asked questions from rattled international investors trying to make sense of China’s recent spate of regulatory moves that have triggered a brutal sell-off in Chinese company stocks over the past few weeks.
The answer to this seemingly easy question is anything but because of China’s obsession with secretive politics and failure to communicate the rationale of its policies of global impact.
“Until the situation is clearer, we want to wait and see,” Reuters quoted its chief executive Masayoshi Son as saying. “In a year or two I believe new rules will create a new situation.”
Son is not alone. Many other international investors have adopted a similar cautious approach to investments in China.
Behind closed doors, Chinese regulators appear to have been shocked by the scale and extent of the market reactions, which saw China’s best tech stocks lose about US$1 trillion in market value by some estimates.
