Xi and Trump Clash Over China’s Spending Standoff – Who Blinks First?
Geopolitical tension meets economic stalemate as two heavyweights wrestle over China's purse strings.
The High-Stakes Game of Chicken
Neither leader shows signs of backing down—while global markets hold their breath. Trump’s signature pressure tactics slam against Xi’s Great Wall of fiscal discipline.
Behind the Numbers: A Cold War of Capital
Observers note the irony: two presidents who love flashing big numbers now trapped in a zero-sum staring contest. Meanwhile, hedge funds quietly short the yuan.
Will this end in a grand deal or mutual destruction? Place your bets—Wall Street already has.
Veteran investors warn newcomers off the rally
Chen Long, an asset-management professional, has turned to Xiaohongshu to flag risks to newcomers. “Many ordinary people come in thinking they could make money, but the majority of them end up poorer,” said Chen, who has invested since 2014.
He added “State-owned companies primarily answer to the government rather than shareholders, while many private entrepreneurs have little regard for small investors.”
Senior officials have increasingly acknowledged equities’ importance for household wealth, amid a property downturn and an uneven safety net that heightens caution.
The Communist Party’s Politburo vowed in December to “stabilize housing and stock markets,” an unusual nod to equities at that level. In July, it called for “increasing the attractiveness and inclusiveness of domestic capital markets.”
Economists see rebound as the only quick fix
Still, confidence is hard to restore quickly. “Except for a stock market rebound,” said Hao Hong, chief investment officer at Lotus Asset Management Ltd. “This is a topic that we economists have been discussing in the closed door meetings in Beijing.’’
Today’s troubles trace back decades. “The exchanges are motivated to fulfill the government’s call for increasing companies’ financing,” said Lian Ping, chairman of the China Chief Economist Forum. “But when it comes to protecting investors’ interests, there are few who are motivated to do it.”
An IPO surge made China the top listing market in 2022, yet scant shareholder safeguards and loose enforcement have produced price collapses and removals, retail investors dub it “stepping on a land mine.”
For example, Beijing Zuojiang Technology, listed in 2019, said in 2023 that a product was modeled on Nvidia’s BlueField-2 DPU. In January the following year it warned it faced delisting amid a disclosure probe, and it was later removed from the Shenzhen exchange. The China Securities Regulatory Commission did not immediately respond to a fax seeking comment.
Since then, officials have tried to narrow the pipeline: tougher screening of weak applicants, stronger fraud enforcement, curbs on follow-on issuance and blockholder sell-downs, and pressure for higher payouts.
It’s starting to have an effect. Last year’s IPO tally dropped to about a third of 2023’s. Firms in Shanghai and Shenzhen paid 2.4 trillion yuan ($334 billion) in cash dividends for 2024, up 9% from a year earlier, according to state media.
“The regulations and overall requirements after IPO have become stricter, in terms of reliability, transparency, or information disclosure,” said Ding Wenjie, investment strategist at China Asset Management Co.
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