China’s techlash gains steam. Again

FIRST IT WASIPOIPOTAL fintech. Last November China’s Communist rulers abruptly suspended the $37bn initial public offering () of Ant Group, a financial-technology titan, and forced it to modify its asset-light business into something more like a bank. Since then they have pursued other internet giants. The two biggest, Alibaba and Tencent, have been targeted by trustbusters. This month regulators banned Didi Global’s ride-hailing app over data transgressions, days after the firm’s $4bn in New York. And on July 24th, in the clearest sign yet that the government wants to revise its state-capitalist model into something with less global capitalism and more Chinese state, online-education companies were told they can no longer make a profit or use offshore vehicles that enable their shares to be traded abroad.Global capitalists are spooked. The share prices of three big online tutors listed in New York, Education, New Orient and Gaotu, are down by two-thirds, wiping out $18bn in shareholder value. The panic has engulfed other Chinese firms with American listings, which were collectively worth over $2trn not long ago (and often also use the offending offshore structures). The Nasdaq Golden Dragon China Index, which tracks nearly 100 of the biggest such stocks, fell by a record 19% in three trading days. Fear spread to Hong Kong, where it has pulled the territory’s benchmark tech-stocks index down by 16%, and even to mainland China. Foreigners have dumped enough mainland-traded shares to cause a surge in currency outflows that pushed down the value of the yuan on July 27th, according to Natixis, an investment bank. Policy uncertainty may have reached a point at which outsiders just stop buying Chinese stocks, says Zhang Zhiwei of Pinpoint Asset Management, a hedge fund.