China intends to tighten regulation of excessively high incomes

The Chinese authorities intend to tighten control over «excessively high incomes» and to encourage those companies that will share their wealth with the public. At the same time, the ruling party called «common prosperity» its top priority.

This became known from the results of the meeting of the Central Commission on Financial and Economic Affairs of the Chinese Communist Party. Securing «common prosperity» has become a major topic of political debate in the country in recent months. This term is usually understood to mean moderate wealth for all, not just some. In particular, the government will force the wealthy Chinese to pay more taxes, which will help to resolve the resulting inequality in income.

Recall that China's largest entrepreneurs have begun to feel pressure from the authorities since the $34.4 billion IPO of Jack Ma's Ant Group was canceled last year, which would have been the largest in history.

A little later, the Chinese taxi aggregator Didi held an IPO on the New York Stock Exchange, ignoring the ban of the authorities. Then Didi raised more than $4.4 billion. However, this did not pass without consequences, and two days after the IPO, the local regulator launched an investigation into Didi, demanding that it stop registering new users, and later demanded that the service be removed from the app stores.

In early July, the State Council of China announced a review of the rules for IPOs of Chinese companies abroad and increased supervision of those companies that have already conducted a listing. To regulate placements abroad, Beijing has already begun to develop changes in legislation that will close the loophole to circumvent restrictions on attracting foreign investment. Such news led to the fact that many large investment funds sold securities of Chinese companies that are listed in the United States.