What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing, as i'm sure you all know, the liberal market economy of post-reform china has been under attack over the past year, as the communist party has cracked down Hard on free market and private enterprise first, there is the dd situation where the country's largest ride-hailing company had its app shut down almost immediately after its ipo on the new york stock exchange. Just a few weeks later, they effectively nationalized the for-profit education industry when they said that education companies were no longer allowed to take profits. This wiped out tens of billions of dollars of value from the likes of tal education and new oriental education group. Literally overnight and just last month, they declared all cryptocurrency transactions to be illegal as a feared.

Decentralized currencies could undermine their strict capital controls and ability to moderate their citizens. It appears that chinese president and general secretary of the communist party xi jinping, has a grand vision to reverse many of the country's liberal economic reforms from the 1980s. He wants to reassert the government's dominance over the chinese economy and society and turn himself into the most powerful chinese leader since mao. To this end, the government has just announced perhaps their most draconian crackdown.

Yet on october 9th 2021, the national development and reform commission or ndrc recently announced draft regulations which will completely abolish privately owned news media companies. The ndrc is one of the most important bodies in the chinese government as they have brought administrative and planning control over the country's economy. The document states that non-public capital may not invest in the establishment and operation of news organizations, including, but not limited to news agencies. Newspaper publishing units, radio and television broadcasting organizations, radio and television stations and internet news, information, collection, editing and publishing service organizations.

They further specify that non-public capital shall not engage in live broadcast services of activities and events involving politics, economy, military diplomacy, major society, culture, science and technology, health, education, sports and other related political directions, public opinion orientations and value orientations. They also shall not disseminate news. Content published by foreign entities basically privately owned news companies cannot report on anything remotely news related. They can't even talk about sports.

If these proposed regulations go into effect, the chinese people's only source of information will be state-run news outlets such as china's central television. Needless to say, the state-run media is rarely critical of the government's policies. There are a few key questions. We will try to answer in this video.

Why is china cracking down on private news media? How far will they go in enforcing these regulations and what does it mean for the chinese economy going forward? Recently, the government has embarked on a broad policy campaign called common prosperity whereby they want to reduce the power of billionaires and large corporations and redistribute this power and wealth to society as a whole. In practice, this means the government will take increasing control over the economy. We first started to see china move in this direction in november of 2020, when alibaba founder jack ma went missing for three months after giving a speech criticizing financial regulations in the country, the de facto nationalization of for-profit education companies also fits the common prosperity agenda. As these companies were widely viewed as profiteering off of the country's highest stress education, culture and charging exorbitant prices to working class families, but besides these high profile cases, the government has been quietly nationalizing privately owned companies at an alarming rate, as reported by the taiwanese publication Liberty times net, in 2020 alone, government-controlled investment companies acquired 51 private companies in strategic industries such as semiconductors pharmaceuticals and renewable energy, as they crack down on large corporations.

The government wants to beef up state-owned enterprises to pick up the slack. The ultimate goal seems to be for the government to make their five-year economic plans more powerful and allow them to completely reshape the economy to fit xi's vision of common prosperity, as it relates to news media. Specifically, the chinese government already controls most of it all. The cable news channels are state-run, such as china's central television, privately owned media generally operates through news websites such as qq.com, which is owned by technology conglomerate, tencent, there's also cyanonews, which used to be listed on the nasdaq until it was taken private by its founder earlier.

This year, but even the privately operated news outlets have historically been heavily regulated by the government. In 2019, they initiated a policy whereby journalists have to pass a test about xi, jinping's teachings on socialism in order to maintain their media credentials. Journalists are often jailed for reporting negative stories about the government. The enforcement of these laws is arbitrary and unpredictable, so most journalists, air on the side of conservatism for their own safety and professional careers.

This has led to a situation where privately owned media companies report news. In a way that is just as favorable to the government as state-run media, while it may seem far-fetched that the government would want to completely ban privately owned news media, it also seems far-fetched that they would abolish the for-profit education industry. That is until they actually did it, but it does seem odd that they feel the need to ban these companies. They already enforce strict censorship.

So it's unclear exactly what they're trying to achieve with this ban, it's possible that she is just acting out of an abundance of caution with china now facing widespread power shortages, as well as the unfolding financial disaster with the evergrand situation. Many observers think the country is at severe risk of recession. She is up for re-election as general secretary of the communist party in 2023. While this is not a traditional democratic election, he needs to maintain strong control of the country if he wants to prevent other high-ranking communist party officials from usurping his power and in light of the problems the country is now facing.

The last thing he wants is for critical articles from privately owned media companies to slip through the cracks of censorship. In fact, there were signs of something similar happening earlier this year with a social media platform weibo, which is widely referred to as the twitter of china, and boasts more than half a billion monthly active users. Weibull has always historically complied with the government's censorship policies, including blocking links to google, facebook and other websites spanned by the country's so-called great firewall. They also actively monitor users posts and delete messages that could be viewed as critical to the government.

For example, in 2013 weibull banned the terms big, yellow duck in may 35th, as some users were using these as code words to refer to the controversial 1989 tiananmen square protest incident more recently, the government has pressured weibull to suspend k-pop related accounts, as they view them. As detrimental to china's culture, but in the summer of 2021 there were indications that the chinese government was not happy with regulating weibull from the sidelines. In july of this year, it was reported in the international media that weighball chairman charles chao, was in talks to take the company private, along with a state-owned investment company. If this transaction were to happen, weibo would become the world's first major state-owned social media company.

The take private transaction never ended up happening and weibull still operates as an independent company listed on the nasdaq. But the fact that the government was even considering buying them is quite notable and shows how large their ambitions are for government control of all aspects of chinese society and culture. Imagine if the us government bought facebook or twitter, whichever administration happens to be in power, would put pressure on them to moderate content in a way that would help them politically. But this is something that could easily happen in china.

They could justify it by saying that they want to ensure the safety of civic debate and further their common prosperity agenda, while the future of weibull remains uncertain. We know that the government is serious about cracking down on what little independent media exists in the country today and their recently announced crackdown on privately owned news. Media is clear evidence of this. So what does this mean for the chinese economy going forward over the past? Three decades china turned from a third world nation to a global superpower by adopting liberal reforms such as allowing for free enterprise and international trade, and over the past 10 years.

Tech giants like tencent and alibaba have allowed them to become one of the global leaders in innovation, but these liberal reforms did not come without a cost. It allowed for the formation of powerful business interests that the government does not have complete control over if they let these reforms go too far. The communist party will eventually lose its monopoly on political power. President xi is walking a fine line between maintaining control of the country and maintaining the economic miracle that they have experienced over the past 30 years.

The recently announced ban on private journalism is just his latest move in this high stakes game. Alright guys that wraps it up for this video, what do you think about the most recent crackdown on china? Let us know in the comments section below, if you enjoyed this content, don't forget to smash the like button and subscribe, so you don't miss future uploads. As always, thank you so much for watching and we'll see you in the next one wall, street millennial signing out.