Last Wednesday China’s Uber – the taxi ride company Didi – raised $4.4 billion in an IPO on the NYSE.
Two days later, last Friday, Chinese regulators announced an investigation into Didi.
Last Sunday Chinese regulators ordered that Didi’s app should not be sold on China domestic sites.
In a grovelling response reflecting the harshness of the China dictatorship, Didi stated: “We sincerely thank the competent authorities for guiding Didi to investigate our risks, and we will earnestly rectify and reform.”
All this naturally affected Didi’s share price but, much worse for Chinese business, it will affect the future confidence of investors in Chinese companies trying to raise capital.
The drama resembles the scuppering of Ant’s $37 billion planned IPO in China in November when regulators intervened at the last minute to stop it going ahead.
In April regulators fined Alibaba $2.8 billion for anti-trust infringements.
Why does the China government want to penalise its domestic companies in this way?
An explanation is that the China government puts its own image ahead of the well-being of its citizens.
It wants to be seen as all-powerful and sees the power and high profile acquired by these companies as a threat to this image.
Slapping down these companies with these abrupt interferences shows the world who’s boss – never mind the economic harm to Chinese industry.
This is not the behaviour of a self-confident government. Nor was was Xi’s recent rant against foreigners – a traditional ploy of dictators facing domestic challenges.
Either the Great Leader has gone paranoid or dragons really are lurking in the Xi hinterland, sharpening their claws