Last updated: 28 Jul, 2021 | 03:50 am
What’s leading to the crash?
China’s latest crackdowns on its technology and education sectors have led to a huge crash in its stocks. The Nasdaq Golden Dragon China Index -- which tracks 98 of China's biggest companies listed in the U.S. -- has plunged by more than 20% in the last one week itself.
This is the biggest weekly decline in the index since the 2008 financial crisis.
What is China’s latest regulation?
Last week, China's Ministry of Education set out a new set of rules which bars online training institutions from earning a profit, or raising funding on stock markets. The latest move is aimed at bringing in sweeping new policy reform in China.
Rationale behind the move
According to the ministry, the new rules will also lower the workload and learning hours of students and improve the quality of after-school services. The Chinese government is also looking to ease financial pressures on families. The financial burden of paying a very high cost for education has led to lower birth rates in the country. Last month, the Chinese government released measures aimed at encouraging births and lowering child-related expenses.
International investors dump Chinese stocks
Most large international investors have sold off their holdings in Chinese-listed companies, due to fears that more sweeping regulations could hurt other industries in China as well. Here are actions by a few funds:
International research houses caution of more sweeping reforms
Repercussions felt in other Industries as well