China Scales Down its Capitalist Trend
We have reported over the last half-year the official moves within China to reduce the growth of both home-grown enterprises and foreign companies. Examples are the online taxi service, Didi, and clipping the wings of Alibaba and Alipay. Using such laws as the new Data Protection and Localisation Act, the Chinese government appears to be dampening what may be considered to be uncontrolled capitalism, and also reducing foreign investment. Troubles in the Chinese construction industry may have also pinpointed the need for more caution.
Recent studies show that Chinese FDI has been reduced in Q2 and Q3 of 2021. India is now rapidly taking over second place globally for investment. Global equity funds have reduced their exposure to China and Hong Kong, according to an analysis of 381 funds. Average exposure has dropped from 5.1% in January to 3.8% in September, as China’s regulatory crackdown on its tech sector hits industries like ecommerce, gaming, and education.
That being said, however, the Chinese social media phenomenon, TikTok, now has more than 1B monthly active users. The company reached this milestone just 4 years after its 2017 launch, with its 2018 merger with Musical.ly and pandemic lockdowns accelerating its trajectory. In comparison, Instagram took twice as long to get 1B monthly active users after its 2010 launch. At a $140B valuation, TikTok’s parent company ByteDance is the most valuable privately-owned company in the world.
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