China’s crackdown on the online-education business marks a turning-point

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The route to an IPO for a young Chinese firm—the reliable way for venture capitalists to get their money back—now borders on perilous

But in the months since then the scope of the regulatory crackdown has grown ever wider. China’s two internet giants, Alibaba and Tencent, are being worked over by the antitrust authorities. Earlier this month Didi Global, a ride-hailing service, was caught in the net just days after it listed in New York. And in the past week the education-technology industry has become a target.

China’s preferences now seem clear. It wishes to see capital raised on its own exchanges, within its purview and on the terms that it dictates. The effects of this on financial markets are likely to linger. China itself may be the biggest loser. And the clampdown will indeed harm Chinese tech. Investors who piled in during recent years have this week been pummelled in public markets. Private American capital is also tied up in Chinese startups. The value in those ventures is now, in effect, frozen. The route to anfor a young Chinese firm—the reliable way for venture capitalists to get their money back—now borders on perilous.

 

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