Read this article from Today online published on 12 Sep 2021 where it wrote about how because of income gap, Xi Jinping tells tycoons to share wealth.
Mr Xi says the Communist Party will pursue “common prosperity,” pressing businesses and entrepreneurs to help narrow the stubborn wealth gap that could hold back the country’s rise and erode public confidence in the leadership. Read more at https://www.nytimes.com/2021/09/06/world/asia/china-xi-common-prosperity.html
We have also seen recently on Tencent and Pinduoduo donating tens of billion of dollars for social initiatives. Even CEOs themselves like Pinduoduo founder Colin Huang, smartphone maker Xiaomi’s cofounder Lei Jun and food-delivery giant Meituan’s founder Wang Xing have transferred blocks of their companies shares worth billions of dollars to philanthropic foundations to use the proceeds for education, poverty alleviation and scientific research.
This "common prosperity" campaign has started a crackdown on the tech giants to prevent monopoly and dominance. In response, China's billionaires have all pledged billion of dollars to charity. According to Credit Suisse Research Institute, the top 1% of the country owns 31% of the country's wealth which is up from the 21% recorded in 2000.
By "spreading" the wealth out, the Communist Party says, more Chinese would have the spending power to drive the economy and reduce China’s reliance on Western capital and know-how, creating the foundation for a new stage of growth.
Many of the best doctors are all concentrated in Shanghai and Beijing said Ms Yuan Jiameng, a Zhejiang native working in Beijing who said she recently searched for treatment for her father for a stomach ailment
Will Hong Kong Tycoons Escape China Crackdown?
Seems like Hong Kong will also not be spared as China get serious about the common prosperity. According to three major developers and a Hong Kong government adviser familiar with the talks, Chinese officials have informed them to pour resources and influence into backing Beijing's interests, and help solve a potentially destabilising housing shortage in Hong Kong.
Developers in Hong Kong have also shown that they are aware with New World and Henderson Land donating rural land as reserves for social housing and recently, Nan Fung Group, Sun Hung Kai, Henderson Land and Wheelock applied for a public-private partnership scheme.
Macau casino facing some huge changes ahead
Gambling licence renewals are not guaranteed, meaning that the casinos could lose their gambling licence. Also, all along, Macau has provided generous tax concessions to the casinos however the Chinese government is unhappy that US shareholders are making profits from the territory, and that the economic benefits should stay within the country.
With the Chinese Government wanting more control over the casinos and more insights, they have also proposed appointing government supervisors to enforce official policy from within. It is huge news as Bill Hornbuckle, chief executive of casino group MGM Resorts, was confident that China’s regulatory crackdown on tech, education and online gaming would not extend to Macau, the world’s biggest gambling centre however things are proving to be very different.
Conclusion
The "common prosperity" campaign looks to be implemented across by the Chinese government at quite a fast rate. Many companies especially those with huge wealth and monopoly over their industries will be on their toes. It's really a situation that is evolving and we don't know how long this will last. For me, I currently do not own any individual China stocks but I do have exposure to a Tracker Fund of Hong Kong (2800) and have a small exposure through Vanguard Total World Stock ETF (VT) and Vanguard FTSE All-World UCITS ETF USD Acc (VWRA). China has been a focal point recently with it's tightening grip on companies and it's citizens to Evergrande situation. Time will tell how it all pans out. Haven't been posting videos but coming one right out on Sunday, look out for it!
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