U.S. listed Chinese equities showed signs of life last week, despite a continuation of the regulatory crackdown from Beijing. While there has been minimal indication of regulatory abatement from Beijing, the recent climb in equities would seem to indicate that investors believe the worst is over.
Cutting Off the ‘Spiritual Opium’
In an effort to combat screen addiction among children, China started out the week by ordering native gaming companies to limit online play for minors to three hours each week. With this new regulation, children under the age of 18 will no longer have access to video games outside of the hours of 8 to 9 pm on Friday, Saturday, and Sunday (and national holidays). The decree came as a revision to laws enacted in 2019, which aimed to limit minors to 13.5 hours of video games per week (90-minutes during weekdays and 3 hours on weekends). Chinese gaming companies such as Tencent, Bilibili and Huya fell briefly on the news before rebounding with the rest of the market.
China’s state media had previously referred to online games as ‘Spiritual Opium’ and ‘Electronic Drugs’ in August 2021.
Unionizing the Workers
On Wednesday, JD.com, one of China’s largest eCommerce retailers, announced that it had formed a union for its workers. Earlier in August, China’s largest ride-sharing company, Didi, announced the formation of its own worker’s union. Chinese courts have recently condemned China’s 996 work culture (working 9 am to 9 pm 6 days a week).
Chinese Technology Titans Bend The Knee
On Wednesday, Ant Group announced a plan to form a joint venture (JV) with Chinese state-backed investment firms to manage its credit scoring operations. Chinese regulators had previously pressured Ant Group to restructure before considering any IPO.
On Thursday, Alibaba pledged to ‘donate’ 100 billion Yuan ($15.5 billion) to charity over the next 5 years. Since April 2021, several other large Chinese firms such as Pinduoduo, Tencent Holdings, ByteDance, and Xiaomi have pledged billions in future earnings to China’s ‘Common Prosperity’ initiative.
It remains to be seen if these concessions from Ant Group & Alibaba will be enough to mend Jack Ma’s relationship with the Chinese government.
On Thursday, China ordered TV broadcasters to shun artists with ‘incorrect political positions’ or ‘effeminate’ styles, in an effort to ‘refine’ the country’s patriotic atmosphere. Just the week before, China announced steps to curb the influence of celebrities and social media influencers, with the government erasing content featuring artists and creators that did not appropriately conform to the party’s values.