Robot Xiao Cong hosts, talks and plays with students in the classroom at a school in China’s Zhejiang province.
VCG | Visual China Group | Getty Images
Billionaire investor Ray Dalio says China’s recent regulatory action has been misinterpreted by some Western investors as “anti-capitalist”.
In a note on his LinkedIn account, Dalio said investors who think this way “will continue to miss” what’s happening in the Asian country.
He explained that he was referring to Western observers who have no direct contact with policymakers and “do not follow the patterns of change in detail” by the government.
“They interpret movements like these two recent ones as Communist Party leaders showing their true anti-capitalist streaks, even though the trend over the past 40 years has clearly been so strong towards developing a market economy with capital markets.” , with entrepreneurs and capitalists getting rich,” Dalio said.
“As a result, they’ve missed what’s going on in China and will likely continue to miss it,” added Dalio, the founder of the world’s largest hedge fund Bridgewater Associates.
Dalio urged investors to understand that Chinese regulators are “figuring out appropriate regulation” in the rapidly evolving capital market environment.
“So if they change quickly and are not clear, it creates these kinds of confusions, which can be misconstrued as anti-capitalist movements,” Dalio wrote.
“Assume such things will happen in the future and invest accordingly. But don’t misinterpret these twists as changes in trends, and don’t expect this Chinese state capitalism to be exactly the same as Western capitalism,” he concluded.
Clampdown on education an effort to reduce inequality
The crackdown on the education sector is actually an attempt to reduce inequality in the country as costs mount in the vast tutoring and enrichment sector, some analysts said.
Restrictions imposed on the sector include China bans tutoring for profit in core school projects, Reuters reported, citing a document circulated by China’s State Council.
“I think the fundamental reason behind this crackdown is actually due to the tutoring and training activities (creating) social inequality, and behind the decline in the birth rate,” Claudia Wang, an education practice partner at Oliver Wyman, told The Washington City Times’s “Squawk Box Asia.”
However, it remains to be seen whether the new rules will really hold back parents.
Wang emphasized some of the parents who are “self-sufficient” and can afford to pay despite the limitations look for tutoring.
“Some of them have very high expectations. No matter how governments regulate the market, they will not give up, they will find tutors for their children,” she added.
On the other hand, parents who are more “laid-back” will be put off and “just give up,” Wang added.