BEIJING/HONG KONG—China’s sweeping regulatory crackdown of recent months does not aim to rein in the country’s private enterprises or decouple from the United States or international financial markets, a top Chinese regulatory official told Wall Street leaders last week.
The actions instead intend to strengthen the regulation of consumer-facing platform companies with a key role in promoting “common prosperity,” or easing wealth inequality, China Securities Regulatory Commission (CSRC) Vice Chairman Fang Xinghai said at a private gathering, according to attendees.
“I don’t think you can find a government anywhere in the world that is as positive and as focused on technology as China,” Fang was quoted as telling the fifth China-U.S. Financial Roundtable (CUFR) on Sept. 16.
Fang said, for example, that Beijing was expected to approve a record number of initial public offerings this year, and two of the people said a majority of companies going public in China would be private companies.
CSRC and Fang did not immediately respond to Reuters requests for comment. The sources who attended the meeting declined to be named as they were not authorized to speak to the media about the discussions.
The attendees said Fang’s remarks at the close of his presentation addressed China’s unprecedented regulatory crackdown, which has wiped billions of dollars in market value off some of the country’s best-known private firms and has weighed on foreign investor sentiment.
Common Prosperity
China accelerated the pace of opening up its multi-trillion dollar financial sector to U.S. firms in recent years, after years of lobbying by Wall Street firms for better access, even as Sino-U.S. tensions rose on issues from trade to geopolitics.However, Beijing’s sweeping new policy moves—including crackdowns on internet companies, for-profit education, online gaming and property market excesses, and its “common prosperity” wealth-sharing drive to ease inequality—have rattled some foreign investors.
These moves prompted officials and state media in recent weeks to try to assuage markets.
China’s Vice Premier Liu He told a forum early this month that the government’s policies and guidelines would keep supporting the private sector.
One of the participants said last week’s comments by Fang, who is also the president of the CUFR, were well-received by his Wall Street audience.
“They listened very intently to what Fang had to say and most of us were very satisfied,” said the person, referring to the Wall Street executives.
The meeting was held virtually and attended by about 35 people, including leaders of top Wall Street firms, said people with knowledge of the discussions.
The CUFR, formed amid escalating tensions between the world’s two largest economies in 2018, last met virtually in October 2020 after meeting twice in person the previous year, before the coronavirus outbreak.
The meeting last week lasted for three-and-a-half-hours, and ideas for further opening and developing financial markets and creating a level playing field between domestic and foreign entities in the world’s second-largest economy were discussed.
