Decoding China’s regulatory paradigm shift

  • 03 September 2021 (7 min read)

Key points

  • A powerful regulatory storm sweeping through many parts of the Chinese economy has left investors baffled at Beijing’s intentions behind the far-reaching actions
  • We view this as a progressive shift in China’s long-term development strategy from ‘allowing some to get rich first’ – started in the Deng Xiaoping era – to a pursuit of ‘common prosperity for all’
  • Recent crackdowns – on the property market, big tech monopolies and the after-school tutoring sector – appear rooted in the hope of building a more egalitarian society
  • Attempts to reshape China’s income structure into an ‘olive shape’ will require multi-faceted reforms to redistribute income and wealth, bolster social safety nets and create equal opportunities for all
  • Beijing’s ability to balance ‘income creation’ with ‘income redistribution’ will be critical to this success. Managing side effects and containing risks from regulatory changes are also key to achieving long-term sustainability without compromising short-term stability
  • This is a delicate manoeuvre and China’s successful navigation is by no means guaranteed. Rising financial market volatility lately reflects growing caution among investors, particularly those from offshore

    Page disclaimer

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. 

    It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. 
    All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. 
    Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited. 

    Disclaimer

    This website is published by AXA Investment Managers Asia (Singapore) Ltd. (Registration No. 199001714W) for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation or particular needs of any particular person and may be subject to change without notice. Please consult your financial or other professional advisers before making any investment decision.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.

    Some of the Services and/or products may not be available for offer to retail investors.

    This publication has not been reviewed by the Monetary Authority of Singapore.