China has had one of the most impressive economic periods in history. Post-Cultural Revolution, they have emerged as a global superpower while also having an authoritarian government and Communists in power. “Made in China” defines how massive the country’s manufacturing sector has become, and the number of innovations and large companies that have come is crazy. However, it seems that this period is destined to end, and this was confirmed by President Xi.
Recently, China has been cracking down on a lot of their tech companies, including giants like Alibaba to rein these companies in and keep them in check with the government. Xi’s speech has now confirmed that even further as China plans to rein in private capital, and the reasoning goes back to the base of China. Xi feels that the economy has become much more Westernized, moving freely without any control, eroding the basis of Communist ideologies. Xi’s goal is to revert it back to Mao’s ideologies, and it makes sense as he believed that capitalism was a transition phase to socialism, which is the goal here. China is essentially trying to increase their government control over the economy by a lot, changing the landscape of businesses in one of the largest economies in the world, and this could have major implications for Chinese stocks like Tencent and Alibaba, who are companies that have already taken a major hit in the last few months. Xi’s already created 100 policies and regulatory actions, so the idea of shared wealth is already being implemented, and this could set the stage for the first Communist economy since Soviet Russia that was a major player in the globe. What do you think about China’s plans?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.