China’s tightening of regulations is not a setback for the country, says economist

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No setback

China’s moves will improve the country’s economic structure, capital markets and governance over the long term, said Chi Lo, senior economist for Greater China at BNP Paribas Asset Management.

“No, I don’t think it’s a setback. I would even argue that this is an improvement because … it will improve China’s structure in the medium and long term, ”Lo told CNBC’s Squawk Box Asia.

As the economy progresses, regulatory and other improvements have to come in – and I see this as a step forward to improve the Chinese system.

Who Lo

Senior Economist, Greater China at BNP Paribas Asset Management

This is “exactly what international investors want to see when they want to get exposure to China or increase exposure to China,” he added. “China cannot really stand still and be a developing market. And as the economy advances, regulatory and other improvements have to come in – and I see this as a step forward to improve the Chinese system. “

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Lo said financial scandals, such as the accounting fraud in the former Nasdaq-listed Luckin Coffee, had previously undermined the credibility of China’s capital market. So it is time to address such issues that are more prevalent in the Chinese home market, he added.

Regarding regulations for tech companies, Lo pointed out that China is not the only country held in check in the sector. Developed countries like the US and Europe have moved in varying degrees to tighten oversight of tech companies as well, he said.