The Chinese president has put the country’s wealthiest people on notice and asked them to give back to society by curbing ‘excessive’ income. According to Chinese state media, Xi has announced that the Communist Party’s Central Financial and Economic Affairs Commission will now place a priority on ‘common prosperity for all’. The rich in China earn 20 percent more than the poor. Since 2015, it has not changed.
In the name of curbing excesses, the regulatory storm washed billions from Chinese corporate valuations, exposing both the policy risk under President Xi Jinping’s increasingly activist tenure and the uncertainty over implementation. China’s Xi Jinping has begun clamping down on industries ranging from bitcoin to Didi Global, the ride-hailing giant, and tutoring, signaling a historic shift in how China treats its economy. With the furious pace of new rules and regulations and the blunt and sometimes unpredictable force with which they are implemented in the world’s second-largest economy, companies and markets have been roiled.
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In contrast, Xi is widely regarded as China’s most powerful leader since Mao Zedong, which analysts say fuels a drive for implementation and amplification across China’s bureaucracy. As lower-level officials aim to please their superiors, it can also carry the risk of overzealous execution. As investors hunted for clues to the next target of government action, they dumped shares in vaping firms, chemicals makers, growth hormone stocks, and distillers last week. State media reports labeling online games ‘spiritual opium’ triggered a sector sell-off, despite no changes to rules.
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