[NTD News July 30, 2021, Beijing time]In the past week, the stock market in China and Hong Kong continued to plummet. In just two days on July 27 and 28, the value of the A stock market evaporated by about 4 trillion yuan. In order to appease investors, senior officials of the China Securities Regulatory Commission held talks with representatives of some multinational banks and investment companies on the evening of the 28th. At the same time, state media also published articles with optimistic views. But scholars believe that China’s economic model has reached a dead end.
The stock markets of China and Hong Kong have recently experienced panic selling of Chinese concept stocks. In the past week, the sell-off has spread from education and training stocks to many Chinese technology company stocks listed overseas, causing the stocks of Chinese companies listed in the United States and Hong Kong to plummet. The Hang Seng Technology Index fell 14% in a week.
The selling wave then spread to the Shanghai and Shenzhen stock markets. On the 27th, A-shares and Hong Kong stocks all fell sharply, and the three major A-share indexes collectively plunged. In just two days on the 27th and 28th, the value of the A stock market has evaporated by 4 trillion yuan. In order to calm investors’ nervousness and halt the dangerous trend of A-shares, the Beijing authorities have taken a series of actions to maintain public opinion and stability.
On the evening of the 28th, the Chinese Communist Party’s state-run Xinhua News Agency announced that China’s “reform and opening up is still firm” and that the foundation for the development of China’s capital market is “still solid.” It even cited that China’s GDP in the first half of this year has increased by 12.7% year-on-year. Data such as true and false are difficult to verify, vigorously promote China’s economic “continuous improvement.”
The article also deliberately defended against the recent official tightening of regulatory policies for off-campus education and training institutions, claiming that the introduction of relevant policies is only aimed at correcting the “pain points of the people’s livelihood”.
At the same time, it is reported that Fang Xinghai, vice chairman of the China Securities Regulatory Commission, held talks with representatives of Goldman Sachs Group and UBS Group and other multinational banks and some investment companies on the evening of the 28th. The chairman of the China Securities Regulatory Commission Yi Huiman also attended the closed-door meeting.
According to Reuters, The Wall Street Journal and many other media citing people familiar with the matter, Fang Xinghai stated during the talks that China has no intention of decoupling from the global market, especially the United States. He also explained that the Chinese (CCP) regulators have recently The rectification of education and training, Internet finance and some other industries is only to solve the problems in these industries and help them develop in a reasonable way. It is hoped that the outside world will not “over-interpret” these regulatory actions.
Fang Xinghai also promised investment bank representatives at the meeting that China’s regulatory agencies will consider the impact of their policies on listed companies when they introduce policies in the future; he also claimed that the Beijing authorities are planning to introduce more policies to attract foreign investment.
After taking a series of actions to maintain stability in public opinion, the stocks of Chinese technology companies listed in New York and Hong Kong on the 29th began to jump, helping to drive the market higher. Hong Kong’s Hang Seng Index rose by 3%, and the mainland stock market also rebounded.
In response, Feng Chongyi, an associate professor at the University of Technology Sydney, who studies Chinese affairs, told Radio Free Asia that the official actions of the Chinese Communist Party were nothing more than to appease the people at home and abroad. People in the industry have no effect, and it is difficult to say whether the CCP will eventually achieve its goals.
Yang Haiying, a professor at Shizuoka University in Japan, said that although the official actions of the Chinese Communist Party can provide some comfort to ordinary shareholders in a short period of time, they cannot solve the problem in the long run.
He pointed out that China’s state-owned enterprises are not listed in the United States, and small and medium-sized enterprises are unable to list in the United States. Together with the withdrawal of a large amount of US funds from the (China and Hong Kong) stock markets, they have jointly caused the decline in the stock prices of China and Hong Kong. The State Council of the Communist Party of China has recently frequently introduced measures to restrict the development of various industries, and large private enterprises bear the brunt.
Yang Haiying said: Western countries have always asked China to carry out institutional reforms, but the CCP just couldn’t do so. China’s economic model “has come to an end.”
(Reporter He Yating Comprehensive Report / Chief Editor: Lin Qing)
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