Asian markets withstand continued Chinese crackdown
Chinese firms rush to participate in 'common prosperity' push
Asian markets hung on to gain on Thursday, 2 September, seemingly acclimatised to the Chinese government’s repeated regulatory crackdowns, which are now tackling ride-hailing firms.
A collection of Chinese regulators, including the Cyberspace Administration of China, the Ministry of Transport and the State Administration of Market Supervision, convened to interview 11 ride-hailing firms on their practices.
Ride-hailing firms affected
Following the meeting, ride-hailing companies were told to give drivers adequate rest time and to reduce the commissions they charge for each ride. The firms were also told to not transfer business risk onto drivers and not to attract potential drivers with misleading promotional campaigns.
In a statement, the Ministry of Transport maintained: “It’s required that these platforms should check their own problems, rectify illegal behaviour, safeguard market orders of fair competition and create a sound environment for healthy development of the ride-hailing industry.”
The announcement wiped the 3% morning gain enjoyed by online delivery giant Meituan, which is also heavily involved in the ride-hailing industry.
Leading vehicle-for-hire company Didi traded down by 1% in pre-market US trading, having jumped by almost 12% on Wednesday to $9.20. Even with this latest gain, the company – which has been continually hammered by Chinese regulatory probes – still trades 40% below its beginning trading level.
‘Common prosperity’ push
The increased scrutiny comes as President Xi Jinping steps up his “common prosperity” push. The effort is aimed at addressing some of the vast wealth inequality that came about as a result of China’s substantial economic development.
With a Xi-led meeting this week telling officials to “urge companies to obey the leadership of the party”, sceptics have argued that the drive is more focused on reasserting the Chinese Communist Party’s (CCP’s) control over the nation’s economy than aiding the poorest members of its society.
The push – whether cynical or sincere – has already started to have an effect on the nation’s private sector. This week, both Didi and the e-commerce behemoth JD.com have established unions for their workers.
On Thursday, reports emerged that Alibaba has set aside RMB100bn ($1.5bn) to help “common prosperity”.
By the end of the day’s activity, the Hang Seng and Shanghai Composite indices closed up by 0.2% and 0.8%, respectively. The Nikkei 225 and Bombay Sensex traded 0.3% and 0.9% higher, respectively.