China defends tech crackdown in meeting with Wall Street chiefs
China's top regulators defended their market-roiling crackdown on various industries in a meeting with Wall Street executives, while reassuring them the stricter rules aren't aimed at stifling technology companies or the private sector.
China Securities Regulatory Commission Vice Chairman Fang Xinghai said recent actions were to strengthen regulations for companies with consumer-facing platforms, and improve data privacy and national security, according to a person familiar with the talks, who asked to not be identified because the meeting was private. Fang defended the moves such as those aimed at the education and gaming industries as meant to reduce social anxiety.
Global investors have been unnerved by the regulatory onslaught from Beijing targeting its biggest technology companies and other industries as well as a push by President Xi Jinping to create "common prosperity." Billions of dollars in potential profits are at stake for Wall Street, which has been expanding in China as the nation opens its financial markets to investment banks, wealth and money managers.
The three-hour meeting of the China-U.S. Financial Roundtable on Thursday included the head of the People's Bank of China, and executives from Goldman Sachs Group Inc., Citadel and other Wall Street powerhouses, according to people familiar with the talks. The meeting marked the resumption of the roundtable that was first convened in September 2018.
The increased scrutiny on Chinese companies should not be interpreted as a decoupling from the U.S. or international
financial markets, Fang told the participants. Beijing remains committed to technology, he said. The CSRC didn't immediately respond to a faxed inquiry seeking comments on Saturday, which was a working day in China.
Beijing's regulatory campaign erased $1.5 trillion from Chinese stocks amid a broader sell-off at its most extreme. Hong Kong-listed gaming conglomerate Tencent Holdings Ltd. last week lost its place among the world's 10 largest companies by market value, leaving no Chinese stock on the list for the first time since 2017.
Shares of Alibaba Group Holding Ltd, China's second most valuable company after Tencent, have dropped more than 30% this year. China's State Council -- the country's cabinet -- said in July that rules for overseas listings will be revised and there will be more regulatory oversight of companies trading in offshore markets. Chinese policy makers are also considering tougher scrutiny over a legally gray corporate structure that is commonly used by Chinese tech companies to seek offshore listings, with some policy adjustment already under way.