The China Securities Regulatory Commission, China’s security regulator, attempted Wednesday (July 28) night to smooth over investment bank executives’ market fears about Beijing’s crackdown on private education, Bloomberg reported.
Losses were triggered after China decided to prohibit large portions of its tutoring industry from making profits, raising foreign capital or going public, Bloomberg reported. The government fears that many of these types of companies have been making inequality worse, increasing financial risk and posing a challenge to the Communist Party’s hold on some parts of the economy.
The meeting with bank executives Wednesday showed that Chinese authorities have grown antsy over the selloff, which led the country’s important stock indexes to the brink of a bear market Wednesday morning, according to Bloomberg.
Some bankers left the meeting feeling like authorities were targeting education policies instead of trying to harm other industries, according to Bloomberg.
“State-run media have published a series of articles suggesting the rout is overdone, while some analysts have speculated government-linked funds have begun intervening to prop up the market,” Bloomberg reported.
The regulator’s meeting gave the assurance that there had been a unique case with the tutoring industry and that things would be able to be restored if the new regulatory developments weren’t intended as some kind of an attack on profitable businesses in the country, Bloomberg reported.
The crackdown on education stocks in China had had ripple effects in the U.S. Chinese stocks also listed in the U.S. were falling after the reports from a Chinese language document said that education training enterprises couldn’t gain backers from stock listings, with reports saying those restrictions had already begun rolling out across the country. This led to two U.S.-listed Chinese stocks in the education space seeing falling prices.