Relief in deeds, not words

Editorial | Mary Ma 7 Sep 2021

In politics, one never says never. When someone undertakes that they will never do something in future, it is often viewed with skepticism.

So when Vice Premier Liu He pledged yesterday that China's guidelines and policies backing the private economy would not change in future, it was viewed with skepticism in some sectors, with some asking if this was an overstatement.

They can be forgiven for feeling uncertain.

After all, so much wealth has been wiped from the market since Beijing announced a series of policies clamping down on a broad range of economic activities, from technology and private tutoring to home prices and, more recently, entertainment.

At the worst moment, as much as US$1.5 trillion (HK$11.7 trillion) worth in stock value was estimated to have vaporized.

Liu was trying to assure local and foreign investors, who were apparently shaken by the development.

He told them little had changed - even as they were trying to make sense of the situation and the meaning of "common prosperity" recently promoted by the leadership.

Liu was emphatic that property rights and intellectual property rights would both be protected if investors had any doubts.

It was not the first time Beijing had given assurance in the face of headwinds - and, most of the time, the impact was short-lived.

Liu was the highest-ranking official so far to appear personally to give the assurance since the latest spate of crackdowns began.

During the pandemic, government officials have become used to attending events virtually. Liu was also making a virtual attendance at a forum on digital economy in Hebei as he gave the assurance yesterday that nothing had changed.

In a video speech, he said that "guidelines and policies for supporting the private economy have not changed, and will not change in future."

The remarks were subsequently carried by Xinhua News Agency.

Meanwhile, Liu didn't fail to praise the private sector for making vital contributions to the country's economy.

In particular, he said, private enterprises contributed over 50 percent of the country's tax revenue, more than 60 percent of China's GDP, more than 70 percent of the technology innovation, more than 80 percent of urban employment and over 90 percent of the market.

He reiterated that, while the mainland continued to pursue economic reforms, it was committed to opening up the economy.

Overall, Liu's address was upbeat. There's no denying that by speaking positively, he's trying to restore investors' confidence.

How did the market respond to the assurance?

Instantly, the stock markets in Shanghai and Shenzhen reversed days of falls to close 4 percent up.

Led by technology stocks, the Hang Seng Index also edged up, albeit by an overall smaller margin. Tencent gained almost 3.5 percent and Alibaba rose slightly more than 3 percent.

It remains to be seen whether the recovery continues.

It is plausible that, while investors responded favorably to Liu's assurance, many are still monitoring the situation.

After hearing the words, they're waiting to judge by the deeds.

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