Xi Jinping shakes investor confidence by targeting China's private sector

New Delhi, Sep 22 Chinese President Xi Jinping has shaken investor confidence by painting bulls-eye on industries ranging from e-commerce to ride-sharing to mortgage lending, and targeting the business executives who have benefited from their success.

As Xi has launched a nationwide political campaign built around the Maoist nostrum of "common prosperity" in response to China's deep income inequalities, investors have become nervous about a broad reversal of fortune, Jeremy Mark writes in Atlantic Council.

The Evergrande crisis only underlines their concerns about the prospects for China's property sector, which, ironically, has been the basis for the rise to prosperity that hundreds of millions of Chinese have experienced in recent decades, and negative spillovers to the wider economy.

One key reason that the company is facing collapse is restrictions on home sales and mortgage lending imposed by Beijing to cool a market driven sky-high by years of speculation.

Mark says nonetheless, there clearly is a deep disquiet in Chinese markets in the face of Xi's rapid turn towards strict regulation of the country's most successful private sector companies, which have helped transform China's economy.

Mark adds that many observers worry that the policy movement reflects a profound shift away from the past four decades of support for the private sector, which is China's primary source of employment. The Wall Street Journal reported this week that Xi "appears to want a state in which the party does more to steer flows of money, sets tighter parameters for entrepreneurs and investors and their ability to make profits, and exercises even more control over the economy than now".

Xi's tectonic shifts, which are now shaking Evergrande, have been creating market tremors for the past year. They began when Xi ordered the cancellation of Ant Group's $34 billion initial public offering