Investors shouldn’t see China’s crackdown as anti-capitalist, says billionaire Ray Dalio

Dalio said that investors interpret such moves as the Communist Party leaders showing their true anti-capitalist stripes. He, however, highlighted that the trend over the last 40 years has clearly been so strongly toward developing a market economy with capital markets, with entrepreneurs and capitalists becoming rich. “As a result, they’ve missed out on what’s going on in China and probably will continue to miss out," he added.

Dalio said that Chinese policymakers signalled to DiDi that it might not be best to go ahead with the listing and that they understandably want to deal with the data privacy issue. In the case of the educational tutoring companies, he said, they want to reduce the “educational inequality and the financial burden on those who are desperate to have their children have these services but can’t afford them by making them broadly available."

His remarks come in the wake of investors selling off Chinese stocks due to Beijing's increased regulatory oversight. "You also need to understand that in this rapidly developing capital markets environment, Chinese regulators are figuring out appropriate regulations so, when they are changing fast and aren’t clear, that causes these sorts of confusions, which can be misconstrued to be anti-capitalist moves," said Dalio.

He, however, maintained that China should communicate more clearly while taking such actions. "I do think that it is unfortunate that Chinese policymakers don’t publicly communicate the reasoning behind their moves more clearly," said Dalio.

DiDi Chuxing: Days after China's biggest taxi service DiDi Chuxing got itself listed on the New York Stock Exchange, the Cyberspace Administration of China (CAC) banned the application and got it removed from app stores. The Chinese government cited a breach of customer data as the reason behind the punitive action.

On June 30, DiDi had rolled out its initial public offering worth $68 billion. This was the second-biggest public listing in the US by a Chinese company after Alibaba Group Holding Limited.

Alibaba & Ant: China's market regulator ‘State Administration for Market Regulation’ (SAMR) levied a fine of 18 billion yuan ($2.75 billion) on Jack Ma-owned Alibaba, an e-commerce platform, for alleged violation of anti-monopoly rules and abuse of its dominant market position.

Besides, Chinese officials suspended Ant's IPO rollout, which was to be the highest valued public listing ever, in November 2020. Ant, the fintech arm of Alibaba, was expecting to raise $37 billion from the market.

Online education business: China’s State Council, on July 23, barred for-profit companies from tutoring in core curriculum subjects. Foreign investment in such companies was banned. The state council also refused to issue any new licences to online education businesses and directed that all existing outfits must register as non-profits.

Chinese officials say the measure was aimed at reducing financial pressure on parents as the prices charged by most of the after-school tutoring businesses were eye-watering.