”Common Prosperity” in China

Chinese regulatory events have dominated recent market news. This regulatory activity led to volatility across the Chinese markets as foreign investors in particular became concerned about China’s policy direction with some even questioning the government’s commitment to a market economy. Numerous sectors have been targeted, whether it is after-school education, online gaming for children, or most recently gambling licences in Macau.

As Ray Dalio of Bridgewater recalled in a recent investor letter, he has witnessed this before whether it was during the market manipulation of 2015 or the Chinese currency plunge in 2015-16. Every time foreign investors interpreted this as policymakers turning away from capital markets, whilst instead we observed steady and fast development of capital markets, entrepreneurship, and openness to foreign investors.

In order to properly understand the regulatory developments we need to separate the changes and the intentions behind them. Away from the capital markets, investors may have noticed that the Chinese government’s references to “common prosperity” have surged in recent weeks. This subject is topical for many in China.

Source: https://www.pensionfundsonline.co.uk/articles/common-prosperity-in-china