China’s entrepreneurial capitalism faces grim future


In May 2022, China’s Vice Premier Liu He signaled the government’s intention to end its “regulatory rectification” campaign — a raft of regulations imposed on the education, ride-sharing and technology sectors.

He is the top economic advisor to Chinese President Xi Jinping — so his message must have been approved by Xi, who seems to have finally awoken to the damage the year-long crackdown has wrought on investor sentiment.

The Heng Seng index dropped by 23.7% between December 2020 and mid-May 2022, a result partly explained by the regulatory crackdown. While the worst appears to be over, the deeper issues caused by the campaign remain unresolved.