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China: Xi's crackdown on capital market troubles big businesses

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Beijing | May 23, 2022 10:55:52 PM IST
As Chinese President Xi Jinping seeks a historic third term in power, it is expected that he will focus on implementing strict regulation of capital which is set to come down heavily on big businesses and will curtail their powers.

This comes as Direct foreign investment into China by multinational companies is falling off a cliff as investors are becoming increasingly pessimistic about the Chinese economy amid President Xi Jinping's strict COVID policies and his stance on Russia's war on Ukraine.

The Chinese President is going in the theories of capital and capital distribution. "...we must fight against monopoly, profiteering, sky-high prices, malicious hype, and unfair competition. Effective supervision of capital should be strengthened in accordance with the law. To curb the disorderly expansion of capital, it is not the absence of capital, but the orderly development of capital. Relevant laws and regulations that are not perfect should be improved as soon as possible, and those with existing laws and regulations should be strictly enforced and supervised," Xi said in a speech given at the Central Economic Work Conference last December, reported Canada-based news portal Financial Post.

He then turns to the economic risks China faces at present and which, according to him, can dent the socialist system propagated by the Chinese Communist Party.

"Serious oversight of corporate governance of financial institutions, and unsuitable financial supervision capabilities and levels. The management of local debts has been lax, and some localities have disguised and illegally borrowed, and the debt burden has continued to increase. The third is the barbaric behavior of the borrower. Some large enterprises are blindly impulsive, irrational diversification, excessive reliance on financial leverage, and excessive industrial capital entering the financial industry," he said at the conference.

The Chinese president also lambasted the investors in big capital for their economic ills, as per the media portal.

"Some shareholders and actual controllers operate and manage financial enterprises in violation of laws and regulations, with insider control, manipulation by major shareholders, financial fraud, and wanton misappropriation of funds. Fourth, collusion and corruption between officials and businessmen is rampant. The heads of some financial institutions and government officials are derelict of duty, corrupt, enriching their own pockets, and relying on the generosity of the country, resulting in heavy losses," he said.

Notably, the Chinese Communist Party is expected to convene its twice-a-decade national congress election in autumn this year. Meanwhile, these MNCs are facing severe challenges in conducting their businesses in China. A host of political and regulatory issues are being exacerbated by Xi Jinping's policies which are conspiring to eviscerate the dreams of many multinationals. (ANI)

 
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