Is there any place on earth more attractive to a business reporter than the world’s communist superpower? It sounds like a contradiction, but every week there are reports of another attack on big business and changes to existing rules from Beijing. This week, it was revealed that Alibaba’s financial affiliate, Ant, whose giant Shanghai and US listings were terminated at the last minute in November 2020 due to Beijing’s displeasure with the company and its founder, will be scrapped. Its credit card business and unsecured lending entity will operate separately and must include the local Zhejiang provincial government tourism company as shareholders. Beijing’s web of new rules governing tech and gaming companies has swiftly wiped out $1 trillion in market value for four of China’s biggest tech companies. Beijing is also reversing its plan, announced in February, to auction off much larger assets, a move aimed at lowering stratospheric asset prices, which had the opposite effect.
The contemporary business world uses the word ‘disruption’ excessively, but it is all very appropriate when surveying the changes made by the Chinese Communist Party in just a few months, trying to rejuvenate itself at the age of 100 this year. Has been doing. Circular prohibitions and directives now limit the amount of time children can play video games where their parents can send them to tutoring. President Xi Jinping’s goal of ‘shared prosperity’ is an effort to reduce economic inequalities, but it also reverses the public-private sector partnership that has led to China’s emergence as an economic superpower. Twenty years after then-prime minister Zhu Rongji gracefully entered the WTO to liberalize China’s economy, it is now moving in the opposite direction.
Xi’s attack on big tech and income inequality matches the concerns of the contemporary sector. Any thinking observer is troubled by the growing inequality, which has been worsened by a partially K-shaped recovery due to a flood of liquidity from central banks. Any user of the technology, that is to say, we should all worry about aspects that Harvard professor Shoshanna Zuboff warned, though in somewhat hysterical prose, in a book of that title ” The Age of Surveillance Capitalism”. Call me a “running dog of capitalism,” the popular Maoist war of several decades ago, but I worry more about surveillance and infiltration by authoritarian and authoritarian governments in America, despite my concerns about Big Tech.
China’s draft rules requiring algorithms to promote “mainstream values” and “transmit positive energy” are written happily for our new-age fantasies, but as the Financial Times’ James Kinge noted. Seen last week, the real intention is to “support—and certainly not oppose—the message of the Chinese Communist Party.” What’s going on in China is through the social credit system, which its government uses to grade online behavior and assess suitability for promotions and even passports, as well as digital money and Smart city too. With surveillance cameras, “the 21st century is a grand experiment for authoritarian rule,” Kinz says. As it happens, the draft rules give Chinese citizens more power to police the behavior of tech firms, and nobody to appeal against the state. To appreciate these changes as they also include rules on screen time for children, naively suggest that today’s teens are not to blame.
Beijing’s moves to tighten regulatory controls on China’s economy reflect the ruling party’s concern about rising inequality, but also signal that the state should dominate the economy and society. As adaptable and shrewd as China’s communist leadership has proved over the past four decades, its economy has grown by leaps and bounds thanks to progressive waves of liberalization, not a tightening of the private sector. The risk is always that the strongman command-and-control ends up with few checks and balances. An example of this is this week’s flip-flop on Beijing’s grand plan to release more land for property development through three large auctions rather than several during the year. Developers not only bid up land prices, but also formed several shell companies to do their bidding around other regulations. The result was a frenzied lottery that raised prices dramatically instead of cooling them. Beijing has had to reverse the policy. Putting the brakes on the rise in property prices, an admirable and urgent goal, can lead to a crash.
If we can make ‘ease of doing business’ a reality instead of a cliché, then this chaotic leftist leaning of Beijing is an opportunity for India. Our efforts to promote India as a manufacturing destination are already looking more promising – despite our complicated labor laws that Ford Motor’s shutdown this month will likely only highlight. Our unicorns will enjoy an even greater heightened assessment now that Chinese initial public offers can be reversed so quickly. But the ground reality, New Delhi’s bureaucrats queuing up the pitch, to new rules aimed at Amazon and Walmart’s Flipkart, to 45,000 small and medium-sized exporters facing liquidity problems ranging from delaying tax refunds by several months. will do it. “Being rich is not a sin,” Deng Xiaoping told Mike Wallace of CBS in 1986. “We allow some peoples and some regions to become prosperous first, with the aim of achieving common prosperity faster.” As appalling as income inequality is in China and elsewhere, that pragmatism demonstrated a better understanding of how economies really work today than Beijing’s policies.
Rahul Jacob is a Mint columnist and a former foreign correspondent for the Financial Times.
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