According to Deng Xiaoping, becoming rich is not a disgrace, but an honor. Becoming as rich as Jack Ma is not so honorable after all. This impression can be gained by observing the activities of the central government in Beijing since November 2020.
The starting point was the fintech sector, when the USD 37 billion IPO of Jack Ma's Ant Group was cancelled overnight and the "modus operandi" of a bank was imposed on Ant Group. In the next round, tech giants Alibaba and Tencent were targeted and accused of distorting competition. The highlight so far has been the dismantling of the online education sector on the grounds that education should be available free of charge and therefore may now only be provided by non-profit organizations. TAL Education, New Oriental and Gaotu are among the largest online tutors that also have Wall Street listings as members of the Nasdaq Golden Dragon Index. Just a few weeks ago, these companies were collectively valued at around USD 2,000 billion, but they have since lost more than two-thirds of their value.
International investors reacted as truly shocked to these relatively harsh changes in economic conditions from a Western perspective. In many cases, therefore, the question is being asked whether the current events represent a new cultural revolution.
In this context, it is irritating that Chinese President Xi Jinping increasingly refers to "common prosperity" in his speeches. This is a clear replica of Mao, who pursued this objective in the context of his - ultimately failed - economic reform steps. Deng Xiaoping's economic reforms and "quasi-capitalist" economic order were truly successful. As a result of China's economic miracle, some 1,058 billionaires emerged in China last year alone - a truly impressive number compared with 696 in the United States or 171 in India. At the same time, Chinese Premier Li Keqianq noted in June 2020 that around 600 million Chinese have to live on around USD 160 per month. The country is currently struggling with a massive social imbalance - just like the U.S. by the way. This imbalance represents a considerable social explosive. The central government in Beijing, on the other hand, is primarily interested in stability in this regard. In this respect, the current moves are primarily aimed at balancing short-term against long-term macroeconomic benefits. In this sense, it is not really a cultural revolution.
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