Caixin
Jul 29, 2021 08:05 PM
BUSINESS & TECH

Tightening of Tech, Tutoring Sector Rules Is Not ‘Suppression,’ State Media Says as Shares Tank

China’s state-run news agency Xinhua said in a commentary that new rules for tech firms and the private tutoring industry will benefit the long-term development of society. Photo: VCG
China’s state-run news agency Xinhua said in a commentary that new rules for tech firms and the private tutoring industry will benefit the long-term development of society. Photo: VCG

China’s official news service said tough new rules for tech firms and the private tutoring industry are meant to “ensure healthy development” of the sectors, as it sought to address stock market volatility sparked by the recent crackdown.

The campaign, which at the weekend reached private tutoring firms with a ban on share sales, will benefit the long-term development of society and is not “suppression” the Xinhua News Agency said in a late night commentary Wednesday as Chinese stocks continued to take a battering.

The moves will protect data security and peoples’ livelihoods, it said.

In the case of the private training and tutoring sector, an excessive inflow of capital has created pressure to oversell, which has alienated the sector from the essence of education, undermining the public welfare purpose of education as well as its ecosystem, the commentary said. The tightening policies are a “rectification of these pain points in people’s livelihoods,” it added.

Addressing investor concerns over China’s commitment to opening up, Xinhua said China has accelerated the pace of opening up its capital markets, and said the country’s securities regulators are supportive of companies choosing where to list based on developmental needs.

Stocks of offshore-listed Chinese companies have slumped as overseas investors withdraw capital across a range of sectors in a panic as they try to guess who will be targeted next after household names like Ant Group Co. Ltd., Didi Global Inc. and New Oriental Education & Technology Group Inc.

Traders say they fear restrictions may expand to other industries such as health care as China tightens its grip on the tech industry and endeavors to reduce the country’s wealth gap.

Chinese authorities this month vowed to step up scrutiny of domestic firms' overseas share sales and announced national security probes into at least three companies recently listed in the U.S.

Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editors Heather Mowbray (heathermowbray@caixin.com) and Flynn Murphy (flynnmurphy@caixin.com)

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