BEIJING: An unexpected pledge by top Beijing officials this week to shore up the economy sent Asian stocks surging after days of jitters over China’s coronavirus rebound, war in Ukraine and an uncertain property market.
It was seen as a sign of China’s economic planners acknowledging anxiety over hot-button issues from tech and real estate to listings abroad.
But the soothing words — delivered after a meeting chaired by Vice Premier Liu He — are yet to be matched by hard policy decisions.
So what does it all mean?
Top financial leaders on Wednesday said they would maintain capital market “stability”, support overseas IPOs and reduce risks involving troubled property developers — whose problems repaying debts have threatened to destabilise the economy.
Their meeting called for policies “beneficial to markets”, indirect but instructive language on government concerns which sent shares — tech stocks in particular — soaring in Hong Kong.
The comments come as China’s annual growth target of around 5.5 percent — its lowest in decades — has been challenged by coronavirus resurgences, a property slump and global uncertainty following Russia’s invasion of Ukraine.
The announcement was music to the ears of investors in Chinese tech firms, which had been flayed for more than a year by a state crackdown on the sector.
Regulators have targeted everything from their market size to data use, rocking share prices, wiping billions off company valuations and smothering IPOs outside of China.
Scrutiny has hit some of the country’s biggest names, including Alibaba and Tencent, pushing once-proud billionaire tech doyens into the shadows.
The latest guidance, which called for more “predictable regulation” of the tech sector, suggests some parts of government are willing to signal more clearly ahead of policy changes.
“It is notable, very notable, that Liu He himself would feel the need to step in,” Kendra Schaefer, head of tech policy research at consultancy Trivium, told AFP, forecasting “a more measured approach to reform and regulation”.
Yet, she cautioned that scrutiny of the tech behemoths — which dominate everything from shopping to ride hailing — and the way they use the public’s data “isn’t going away”.
China’s heavily indebted property sector has sagged under rules dubbed the “three red lines”, which targeted debt ratios to reduce the risks of companies going bust.
The rules challenged developers’ models of endless debt-driven expansion and major firms have been pushed to the brink of collapse.
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