Charlotte Street Partners



The China tech crackdown continues

Written by Li-Ann Chin, associate
Edited by Kevin Pringle,  partner
16 August 2021 

Good morning,

In June 2012, Cheng Wei left his cushy executive role at Alibaba with an idea to start a ride-hailing firm. He named it Didi Dache, directly translated to “honk honk taxi”. Ten years later, Cheng Wei had successfully established Didi as a near-monopoly in China’s lucrative ride-hailing market, with more than 550 million riders using the app every day.
Things were, for the most part, going swimmingly for Didi and Cheng Wei, until the company defied direct orders from Chinese regulators to push ahead with its New York listing plans in June – a day before China’s 100th anniversary of the nation’s communist party.
Two days later, the Cyberspace Administration of China launched an investigation into Didi on suspicion that the company had violated data privacy and national security laws. It ordered the company to stop registering new users and instructed all Chinese app stores to remove Didi’s app. The company’s shares have been on a downward spiral since then.
The ride-hailing app isn’t the only one facing a crackdown from authorities back home. The recent regulatory assault launched by Beijing has equally lambasted the stock prices of Tencent, Pinduoduo and Meituan. An eye-watering $87bn is estimated to have been lopped off the net worth of the tech sector’s wealthiest moguls since the start of July. Jack Ma’s fortunes, in particular, are estimated to have fallen $2.6bn in the same period, down by almost $13bn since Ant Group’s IPO was scrapped last year.
Late last week, the Chinese Communist Party’s (CCP) central committee and state council published a five-year plan to strengthen regulatory control over strategic sectors including technology and healthcare. And while the policy-document failed to provide any specific instructions or measures, analysts are sure of Beijing’s intention. The crackdown is expected to intensify. 
The move is entirely in line with the CCP’s political pledge rolled out last year to deliver “common prosperity” and moderate wealth for all. China’s tech tycoons have been deemed in recent years to become too rich, too arrogant and too powerful, leading netizens to grow increasingly resentful of tech giants and the chokehold they have on China’s economy. In the state-owned media, commentators have long clamoured for government to rectify the nation’s influential tech sector and its huge wealth-inequality problem.
At any rate, a clear message has been sent. President Xi Jinping in a speech last month to entrepreneurs cautioned that their “thoughts and actions must be aligned with the analysis, judgment, decision-making and planning” of the CCP.
In other words: it’s “put the nation’s interest first” or else.


The US military has taken control of Kabul’s international airport to evacuate American and allied staff after the Taliban seized Afghanistan over the weekend and the government collapsed on Sunday, with president Ashraf Ghani fleeing the country. However, commercial flights have mostly been suspended, stranding hundreds of desperate Afghans and foreign nationals.
Downing Street sources confirmed that prime minister Boris Johnson is set to request the recall the of parliament this Wednesday to discuss the crisis in Afghanistan. The prime minister has also called for an “international effort” from the West, saying that no one wants Afghanistan to become a “breeding ground for terror.”
Thailand’s youth-led anti-government protest regained momentum, as protestors planned mass demonstrations on Sunday, with convoys of cars to converge at several prominent locations in Bangkok, calling for the resignation of prime minister Prayuth Chanocha amid rising anger over the government’s handling of the pandemic.
All 16 and 17-year-olds in England are set to be offered the chance to book their first Covid-19 vaccine dose by 24 August, health secretary Sajid Javid confirmed. Invites are also being sent out in Wales, while walk-in centres are open to older teenagers in Northern Ireland. Adolescents in Scotland have similarly been encouraged to register their interest online.

Business and economy

Prime minister Boris Johnson is expected to delay his highly-anticipated Cabinet reshuffle, at least until the COP26 summit in November. He aims to hold it when the government is confident that the worst of the pandemic has passed and a new job can be found for Alok Sharma, president of COP26, who the prime minister is reportedly a supporter of. Sources say that Johnson is eyeing up potentially two reshuffles ahead of the next general election, which must be held before 2024, with the aim of giving a completely new face to his government. (£)
Health secretary Sajid Javid slashed the cost of NHS travel tests from £88 to £68 in a bid to help holidaymakers and support the travel industry. However, he has ruled out implementing a price cap on PCR tests sold by private providers, stating that the health department is currently conducting an internal review of pricing and services of private providers listed on the government website. Test providers failing to meet government requirements are expected to be removed by end of August.
UK sandwich chain Pret A Manger is planning to launch some 100 franchises outside London and other major UK cities, as part of efforts to pivot away from merely catering to an office-working customer base. The group has acknowledged its previous over-reliance on London and is now considering plans that include possible regional franchise partners, Pret drive-throughs and high street shops in smaller towns. (£)
The quarterly survey by Britain’s Chartered Institute of Personal and Development indicate that British employers plan to increase staff numbers by the most in more than eight years over coming months, and only a handful intend to make staff redundant when furlough ends next month. Employer sentiment is highly optimistic and redundancy expectations appear much lower than originally predicted during the pandemic.

Columns of note

The Taliban’s rapid advance across Afghanistan has now reached the gates of Kabul. President Ashraf Ghani has fled the country. The US now faces a humiliation akin to the fall of Saigon in 1975 – which just last month was deemed implausible by president Joe Biden. The FT’s editorial board writes about how Biden’s decision to pull US troops from Afghanistan is a miscalculation destined to haunt the rest of his presidency.
British seaside towns – Bournemouth, Scarborough, Llandudno – will realistically never trump the Mediterranean coast as best places to spend a sun-drenched fortnight during summer. But they could make the perfect short weekend break for Britons in a climate-conscious, post-Covid era in which flying off to Portugal or Spain for a three-days-two-nights trip just isn’t worth the faff. All they need is a bit of love, enough imagination and a whole lot of regeneration, writes Gaby Hinsliff in The Guardian.


The week ahead

A flurry of retail news in the week ahead will put market focus on the consumer, as the US Census Bureau is expected to release July’s monthly retail sales report on Tuesday morning, and retail heavyweights such as Walmart and Home Depot report earnings. A small decline is expected for US retail sales in July.
All eyes will similarly be on second estimate GDP numbers for the eurozone on Tuesday. Claimant count, employment change and the unemployment rate will be in focus in the UK. Inflation and retail sales figures for the UK are due mid-week on Wednesday and Thursday.
Finalised inflation figures will be released for the eurozone on Wednesday alongside wholesale inflation figures from Germany, as will minutes from the Federal Reserve’s policy meeting in July. Policymakers last month hinted at scaling back the easy-money policies adopted at the start of Covid-19, and the minutes are anticipated to offer more insight on those plans.
In the US, Macy’s, Target, TJX and Lowe’s are among retailers expected to report in the coming week. Investors will be watching for updates on what retailers are facing in the job market and how they expect to handle rising prices.
In the UK, construction company Balfour Beatty and housebuilder Persimmon are set to publish their interim results on Wednesday. Chemicals company Boytrol will report its final-year results on Thursday.

What’s happening today?


Int. Economic Announcements
(07:00) Wholesale Price Index (GER)

Source: Financial Times

did you know?

In May 2008, the first bagel made it to outer space from the International Space Station on mission STS-124. 45-year old Astronaut Greg Chamitoff, the nephew of the owner of the store, managed to take a box with four six-packs of bagels from Fairmount Bakery with him in his shuttle into space.

Parliamentary highlights

House of Commons

The House of Commons is in recess until 6 September 2021 but will be recalled on 18 August to discuss the situation in Afghanistan.

House of Lords 

The House of Lords is in recess. The House will next sit on 6 September 2021.

Scottish parliament 

The Scottish parliament is in recess until 30 August.