HONG KONG: After China's year of unprecedented crackdowns, roiling markets, and halting deals, bankers and lawyers expect tighter scrutiny in 2022, but say clearer rules will give investors some certainty about the regulatory environment.
Over the past year, Beijing has clamped down on antitrust violations, banning private tuition groups, reined in property developers' debt binge, and made some offshore listings close to impossible.
Analysts expect that the actions will extend into the new year with particular focus on data protection and deals that present national security risks while authorities try to step up control on private enterprise.
Logan Wright, director of China markets research at Rhodium Group, said investors were forced to consider a series of new regulatory risks over the last year, and those fears are not going to disappear soon.
He said that there have been some bureaucratic institutions expanding their purviews in recent months, which has broadened the range of potential regulatory concerns for investors next year.
In November, China elevated the status of the Antitrust Unit of the State Administration for Market Regulation to the deputy-ministerial level, a bureaucratic promotion that gives it more access to resources for probing deals.
The Reuters reported last week that online brokerages are banning from offering offshore trading services to mainland clients due to concerns about data security and capital outflows, which is a sign of new measures to come.
Beijing has expanded its practice of taking minority stakes in private companies, once limited to news outlets, to firms with large amounts of key data, sources told Reuters.
Alex Roberts, a Shanghai-based lawyer at Linklaters, said regulators will look deeper into the network security of big technology companies and expects greater overlap between data and antitrust regulators' objectives.
The regulatory moves come as China heads into a critical year with President Xi Jinping almost certain to secure a historic third term as the Communist Party leader. Andrew Collier, the managing director of Hong Kong-based Orient Capital Research, said the tightening of government controls is unprecedented in the years since Deng Xiaoping opened the economy.