The sudden recent wave of regulatory tightening hitting China’s internet companies has shaken investor confidence. Markets were badly prepared; they had priced in largely unrestrained growth of big tech amid continued easy regulation. Many business models will need to be adjusted, which will weigh on future profit growth.
While these individual regulatory actions were guided by specific motivations, the actions are consistent with China's goal of ‘common prosperity’ that has recently risen in prominence.
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Topics: China, Public policy and regulations, Greater China, Investment, Financial factors