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The Nikkei View

Investors should beware of broader private sector crackdowns in China

Growing restrictions on for-profit activities may undermine startup investment rationale

A trader works during Didi Global's IPO in New York on June 30. Beijing has tightened its control over internet giants such as Didi, Alibaba Group Holding and Tencent Holdings.   © Reuters

China's tightening grip on private companies is forcing international investors to rethink their strategies. This trend could have serious consequences depending on the course charted by the leadership in Beijing.

For 30 years, China's emerging companies have absorbed funds from global investors looking for high-risk, high-return projects, grown, and then profited investors. Now that virtuous cycle could fall apart.

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