GOOD MORNING FROM LONDON
The FT reports today that China’s Securities Regulators held a phone call yesterday with Executives of Global Investors including Black Rock, Fidelity, Goldman Sachs and JPMorgan. No information about the topics discussed was announced but news of the call boosted Chinese shares which had fallen as a result of regulatory action by Beijing. The Hang Seng Tech Index rose 8%.
It was an important initiative by Beijing + represents an understanding of the need to maintain an ongoing dialogue between Regulators and Investors. China has two goals;- first, China wants to encourage Wall Street to maintain its substantial and expanding investment in China. It is part of its strategy to defeat the Biden inspired “De-coupling” policy and, hitherto, it has been very successful. Second, China wants to maintain control over its growing Capitalist sector which China has encouraged because of its important contribution to economic development.
This is an issue of Power. Who is in control in China – the Party or the Capitalist? It has to be the Party for the long term stability of China and the World. In a throwback to the distinctions made by the Party during the Civil War against the Kuomintang – when it recognised the positivity of the national bourgeoisie as opposed to the negativity of the comprador bourgeoise – today China will encourage its Capitalists to be successful but will bring them down if they attempt to take over the functions of Government.
In recent days China has acted against ride-hailing Didi Chuxing, Alibaba’s Taobao platform, Sina Weibo, Kuaishou + the popular fashion Xiaohongshu. It will continue to act where these companies challenge the Party. This is the message to Wall Street and Global Investors. China is safe for investment because the Party knows what it is doing + remains the power in the land.