(Bloomberg) -- Former U.S. Treasury Secretary Lawrence Summers said China's markets are a “riskier environment” for investors as the government intensifies its regulatory clampdown across industries.
China under President Xi Jinping has been cracking down on its most powerful tech stars, including Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Didi Global Inc., helping ensure its grip on society. The government is also moving to address consumer worries about the gradual erosion of their privacy as tech companies make rapid advances in the use of tools from facial recognition to big data.
The Hang Seng Index this week plunged to enter a technical bear market, showcasing how the moves have affected China-linked stocks.
“Bad things keep happening, adverse surprises keep happening,” Summers said on Bloomberg Television's “Wall Street Week” with David Westin. “The risks for foreign investors are going up -- and have to be going up at a time when the greater insertion of the Communist Party into every private enterprise is emerging as a very important priority for the Chinese government.”
Summers, a paid contributor to Bloomberg and a professor at Harvard University, said “anxiety is the right thing” for investors to feel.
“It's certainly a riskier environment and when you have a riskier environment people demand much higher returns,” he said.
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