As China stock market price plummeted due to concerns of ultra-hard regulations, which have already begun to engulf the private education market, government and state media are taking emergency measures. Other sectors were not targeted. Markets responded immediately.
On the 29th, Xinhua News Agency reported that China Securities Regulatory Commission senior executives held a video conference the day before to brainstorm government response to the crackdown on private education on China stock market.
An official familiar with the matter told a major foreign press that the meeting was chaired by Fang Xinghai, vice chairman of the council, and that several major international banks attended, including Goldman Sachs and UBS.
As a result of the meeting, it is known that the SRC discussed with each investment bank the measures and countermeasures to calm the stock market chaos and explained the government’s intentions and regulatory framework.
According to an official, the regulation is designed to send the message that the private education market does not present any threat to businesses in other sectors.
It was also reported that Chinese companies would be allowed to go public in the United States. Chinese authorities have effectively blocked IPOs of Chinese companies in the U.S. since the beginning of this month on the grounds of leaking critical national information.
China will introduce new policies more cautiously in the future to avoid market volatility, Fang said, allowing the market enough time to react to the new policies, according to the Wall Street Journal and other sources.
Foreign news outlets interpreted this as “an effort to calm market concerns about China’s crackdown on private education.” “This is the latest sign that Chinese authorities are worried about a stock price collapse.”
The Xinhua news agency also declared that the rules regarding private education have made a major difference for the livelihood of Chinese citizens, since excessive capital was injected into the market and undermined the essence of education.
“The aim is not to coerce and pressure the sector, but to promote the long-term development of the economy and society.”
The China-linked market views the government’s $120 billion regulation of the private education market as a “starting point” that can quickly shrink the private economy sector, not as a special case.
The Chinese government has also upset large conglomerates, such as Ma’s Alibaba and DIDI, China’s largest car-sharing service. Due to this, Chinese stock prices quickly dropped out of the global stock market on the 26th and 27th by about 4.3 trillion yuan.