Anson Au

The View | Three reasons not to fear China’s regulatory crackdown

Beijing cannot afford to jeopardise its international capital flows or domestic market stability, and besides, its privacy regulations mirror Europe’s data protection rules

Regulating Big Tech will also protect and strengthen China’s growing middle class, ultimately a tailwind for the world economy

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A visitor walks past an outdoor installation at the China International Big Data Industry Expo 2021 in Guiyang, Guizhou province, on May 26. Photo: Xinhua

Anson Au

Published: 6:45am, 26 Aug 2021

China’s ramping up of regulations in the tech and education sectors has made headlines around the world, and triggered a global sell-off of more than US$1 trillion in related stocks.

In an unprecedented move, tutoring companies nationwide will be barred from profit-taking. Likewise, Didi Chuxing was banned from accepting new customers after it went ahead with a public listing in the United States in defiance of Beijing, which had cited concerns about data management.

This ongoing transformation has roiled analysts, writers and investors alike. Last week, the Hang Seng Index fell to its lowest level this year, closing 8.75 per cent down in the year to date, and the Shanghai Composite Index has also languished.

However, economic and legal history tells us we should not fear this crackdown, for three reasons.

First, China will not jeopardise the channels of capital that flow between itself – through Hong Kong – and the West. These took decades to build and have created prosperity and stability in the region.