Macroscope | Why China’s crackdown on tech and education won’t scare off global investors

Are international investors losing confidence in China’s economy and markets? Beijing’s regulatory clampdown on China’s technology and education sectors has taken its toll on sentiment towards the world’s second-largest economy, which is already having to contend with a slowdown and a further deterioration in US relations since Joe Biden become president.

The latest crackdown – the government’s decision last weekend to ban academic tuition groups from making profits, raising capital or going public – has ricocheted through global markets amid concern that the intensifying regulatory pressure will have a detrimental impact on broader sentiment.

The “Didi effect” – the fallout from Beijing’s launch of a data security probe against ride-hailing group Didi Chuxing just days after its initial public offering in New York, which heightened concerns over political and regulatory risks in China – has already wreaked havoc with China-sensitive assets.

The decline pales in comparison to the dramatic fall in the Hang Seng Tech Index. Launched last year to track the 30 largest Hong-Kong-listed tech firms, including Tencent Holdings and Alibaba Group Holding (the owner of the Post), the index is down 22 per cent since June 27, taking its losses from its mid-February peak to a staggering 41 per cent.

The shares of US-listed Chinese firms have also been dealt a heavy blow following Beijing’s announcement on July 10 that nearly all companies seeking an overseas listing must undergo a cybersecurity review.