China's biggest private companies are in chaos. It's all part of Beijing's plan
China's crackdown on private enterprise has wiped out more than $1.2 trillion in market value for many powerful Chinese companies and stoked fears about the future of innovation in the world's second largest economy.
But the end goal of Beijing's aggressive bid for control isn't about creating chaos. The government wants to make clear to its corporate champions that tapping capitalist markets is fine — as long as it is on the ruling Chinese Communist Party's terms.
The heavy selling has accelerated in recent months as Chinese authorities slap companies with fines, ban apps from stores and demand that some firms completely overhaul their businesses.
Hundreds of billions of dollars in market value has been erased in the last week alone, after regulators announced curbs on China's for-profit education industry and its food delivery sector.
The way Beijing sees it, the efforts to rein in private enterprise are meant to protect the economy and the country's citizens from instability. They're also intended to fix longstanding concerns around overwork, data privacy and inequality in education.
"Ultimately, Beijing's crackdown on private business is about control," said Alex Capri, a research fellow at the Hinrich Foundation. "The main priority is about preventing behavior amongst private companies that could engender more independent and potentially non-conformist activities, which undermines Beijing's state-centric model." Read More at https://edition.cnn.com/2021/08/04/tech/china-crackdown-tech-education-mic-intl-hnk/index.html