Ant Founder Jack Ma Faces Backlash From Regulators - WSJ - "Jack Ma is getting a lesson about who is in charge.Chinese regulators on Tuesday suspended the $34 billion initial public offering of Ant Group, the online-finance operation carved out of e-commerce giant Alibaba Group, just two days ahead of what was planned to be the world’s largest-ever initial public offering... It is hard to overstate the importance in China of Mr. Ma and his two companies. They have become synonymous to innovation. The media in China, using Mr. Ma’s Chinese name, calls the country’s rising tech sector, “The era of Ma Yun.” Mr. Ma’s criticism of regulators last week for stifling innovation appears to have brought his feud with the government to a head at a risky time for Ant."
All must bow to the CCP
How billionaire Jack Ma fell to earth and took Ant's mega IPO with him - "Corporate China’s shiniest star was just days away from seeing his Ant Group list on the stock market in a record $37 billion (28.40 billion pounds) deal, when he chose to launch a blistering public attack on the country’s financial watchdogs and banks.The regulatory system was stifling innovation and must be reformed to fuel growth, billionaire Ma told a summit in Shanghai on Oct. 24 attended by the great and the good of China’s financial, regulatory and political establishment.Chinese banks, he said, operated with a “pawnshop” mentality.It was this speech that set off a chain of events that ultimately torpedoed the listing of Ant... “Jack is Jack. He just wanted to speak his mind,” said one of the people.It was a costly miscalculation."
China’s President Xi Jinping Personally Scuttled Jack Ma’s Ant IPO - WSJ - "Chinese President Xi Jinping personally made the decision to halt the initial public offering of Ant Group, which would have been the world’s biggest, after controlling shareholder Jack Ma infuriated government leaders, according to Chinese officials with knowledge of the matter... Mr. Xi, for his part, has displayed a diminishing tolerance for big private businesses that have amassed capital and influence—and are perceived to have challenged both his rule and the stability craved by factions in the country’s newly assertive Communist Party."
China CCP to Nationalize Jack Ma's Alibaba and Ant Group - Report - "the government wants to make a lesson out of Alibaba... Xi Jinping, Chinese President and CCP general secretary, had said in October that the plan was to make China a more state-controlled economy based on domestic demand. Observers think China's political economy is poised to see major changes. Many believe that Xi will change the pattern of property ownership in the country."
CCP announces plan to take control of China's private sector - "It had a long-winded title: "Opinion on Strengthening the United Front Work of the Private Economy in the New Era".The ultimate goal is for the party to have ideological leadership of private enterprise.The statement seeks to improve CCP control over private enterprise and entrepreneurs through United Front Work “to better focus the wisdom and strengthen of the private businesspeople on the goal and mission to realise the great rejuvenation of the Chinese nation.”"
Disappearing Billionaires: Jack Ma And Other Chinese Moguls Who Have Mysteriously Dropped Off The Radar - ""whether he was detained or voluntarily laying low, either one is a version of the Party reasserting its absolute power.”Ma’s absence from the public sphere is part of a larger pattern. As Forbes has reported before, in recent years at least half a dozen other billionaires and wealthy businessmen have vanished from public life for a period of time after running afoul of the Chinese Communist Party... “Concentrations of great wealth, especially in the hands of private business executives as opposed to state-owned-enterprises, enable the exertion of influence and are therefore a potential threat to the Party,” says Friedberg. “Under Xi, and especially in the last few years, the CCP has made a regular practice of arresting such people and stripping them of their assets. Whatever the particular details of each individual case, the larger point is to send a message: no one is above the Party or beyond its reach.”"
With investigation into Jack Ma's Alibaba, China gets tougher on tech - "“In Chinese culture, if you are a rich guy and you have very strong economic power and social influence, then you are politically dangerous, and you need to keep a very low profile to be safe,” said Gary Liu, an independent economist in Shanghai.People in China see Ant as a major beneficiary of the authorities’ cautious approach toward regulating internet finance. “But still, he was complaining,” Mr Liu said of Mr Ma.“In Chinese culture, that kind of person is not respected.”"
Xi Jinping Is Undoing China's Economic Miracle - The Atlantic - "China’s economic “miracle” wasn’t that miraculous. The country’s high-octane ascent over the past 40 years is, in reality, a triumph of basic economic principles: As the state gave way to the market, private enterprise and trade flourished, growth quickened, and incomes soared.This simple lesson appears, however, to be lost on Xi Jinping. China’s leader is rejecting decades of tried-and-true policy by reasserting the power of the Communist Party within the economy and redirecting Chinese business inward. Indeed, faced with escalating hostility in Washington, Xi’s pivot seems, if anything, to be accelerating—with potentially serious consequences for China’s economic progress, and its relations with the world... another prominent entrepreneur, Sun Dawu, was detained for “provoking quarrels and disrupting production,” and the government seized his agriculture company. Sun, who has sometimes been critical of the government, may have been targeted over a land dispute with a state-owned farm... Things weren’t supposed to happen this way. Deng Xiaoping, one of Xi’s predecessors, who launched China’s now-famous pro-market reforms in the late 1970s, understood that the country was destitute because it was strangled by the Communist state and cut off from the world. Deng and his successors steadily lifted controls on private investment, trade, and foreign business. Unfettered by overbearing state planners, China’s entrepreneurial energies, mixed with imported capital and technology, unleashed an explosion of growth and wealth.When Xi took power in 2012, he initially appeared to be following the by then well-trod road of reform. In late 2013, a Communist Party plenum issued an economic blueprint that had many economists and businesspeople convinced that big change was afoot. And change did come, just not the kind they expected. Though Xi has occasionally implemented market reforms—the financial sector has been opened more widely to foreign investors and firms, for instance—overall, he has shown a preference for the very visible hand of the state... Classically trained economists frown upon Xi’s program. He’s ticking just about every box of what not to do to propel incomes and innovation... By favoring the state sector, Xi is funneling valuable money and talent to notoriously bloated and inefficient government enterprises instead of far more nimble and creative private firms. The negative effect shows up in miserably poor productivity—a disaster for an aging society still catching up with the richest nations—and mounting debt, now nearly three times the size of national output. In an October report, Julian Evans-Pritchard, an economist at the research firm Capital Economics, dubbed the self-sufficiency drive a “lose-lose” for China’s economy, because it diverts resources from more productive purposes and forces firms to choose suppliers for political, not economic, reasons. “Pursuing self-sufficiency may still be rational as a form of insurance against aggressive decoupling by the U.S. and its allies,” he wrote. “But China’s economy would be better off if such insurance weren’t needed in the first place.”... The U.S. supported Beijing’s economic reforms based on the hope that as China grew richer, everyone would benefit from its greater prosperity and security. But if Xi succeeds in replacing more of what China purchases from the world, he will also undermine the economic rationale for continued engagement with a brutal authoritarian regime. Xi thinks he is shielding China against isolation. He could instead be causing it."
China Rich Kids Try to Avoid Being Target as Xi Tackles Wealth Gap - Bloomberg - "“We learned how to behave when we saw our friends’ families taken down and jailed,” said Tu Haoran, 32, founder of Fantasy Entertainment, one of China’s largest DJ agencies. “There have been too many cases around me since 2016. Everyone is playing the low-profile card now. You don’t have to let the world know that you make some money. What’s the point of being high-profile?”... In the World Economic Forum’s inaugural social mobility index released in January, China ranked 45th of 82 countries, below the U.S., Russia and most of Europe. A Credit Suisse Group AG report in October warned that wealth inequality has “risen quite quickly” after China’s transition to a market economy: At the end of 2019, China had 5.8 million millionaires and 21,100 residents with wealth above $50 million — more than any country except the U.S... For the majority of people in China who aren’t born into that elite, it’s becoming harder to climb the social ladder. As is often the case when countries develop, the rich can give their children a leg up in education and property ownership — two common pathways to upward mobility.A 2018 report by the Organisation for Economic Co-operation and Development found that it would take seven generations for someone born into the bottom 10% in China to approach mean income, compared with five in South Korea and four in Japan. While China scores well on access to education in the WEF index, the quality of schooling remains poor outside of urban areas, and wages are relatively lower for a larger percentage of the population than other countries.That points to a more pressing political problem for Xi: Hitting a target of doubling per capita income from 2010 levels before the Communist Party celebrates its 100th anniversary in 2021. As part of that, his government just announced that China has eradicated extreme rural poverty even as the pandemic exacerbates the divide between rich and poor... Many of the rich young fuerdai are well aware that messing with the Communist Party is the quickest way to lose everything, and potentially end up in jail or whisked away like actress Fan Bingbing, who was secretly held for several months in 2018 over tax evasion. But they also don’t think the government will move quickly to seize their income, with many noting recent speeches from Xi speaking about the value of entrepreneurship to drive growth.“My stance is really to follow the path that the government leads — I know our fate moves in tandem,” said Wang, the son of a billionaire media tycoon, while sipping on champagne at a recent brunch in Shanghai.“In China, the ‘hate rich’ culture has lasted for a long time, since the Cultural Revolution,” he added, referring to political upheaval targeting China’s elite that began in the 1960s and decimated the economy. “For me and my friends, this generation, one thing we have in common is that we want to create our own wealth, instead of fearing our fathers’ wealth gets taken away.”Wang’s father wants him to stay under the radar. None of the companies in his business empire are linked to the younger Wang’s name and the two have been careful to keep any mention of their connection off the internet. Wang says his father gives him a “limited” allowance and won’t let him have a credit card to prevent him from spending extravagantly and drawing attention to himself."
For China’s Business Elites, Staying Out of Politics Is No Longer an Option - The New York Times - "By going after Didi and a few other U.S.-listed internet companies for data security concerns, Beijing has effectively laid the last brick of the digital Berlin Wall that increasingly separates the Chinese internet from the rest of the world. Beijing has made it clear that it is serious about keeping important data within its borders while pressuring its tech elites, who are among the biggest beneficiaries of globalization, to show their loyalty and obedience... Didi denied that because it had gone public in New York, it had to turn over user data to the United States. A Didi executive said on social media that the company stored all its Chinese data on servers in China. But many articles and social media posts pointed fingers at the company, and some online users said they had deleted the app. The attacks soon turned personal."
Data security means only the CCP gets your data
China Triggers $1 Trillion Market Meltdown, And It’s Just Getting Started - "Beijing’s scattershot approach in hitting some of the economy’s most vibrant sectors risks repelling foreign investors—a group China claimed to be courting. The upshot could be an exodus of foreign capital as investors lose trust in Xiconomics. Really, who would trust betting on a big Chinese IPO in the months ahead? It’s hard not to conclude that Xi has decided capitalism just isn’t for China. The country’s leadership is effectively nationalizing certain thriving sectors—or leaping in that direction—and dictating what can be done with profits. Adam Smith has left the building when Xi’s team are telling Alibaba Group and Tencent how to reinvest their earnings. Or, strong-arming food-delivery giant Meituan to hike wages. A capitalist system would use taxes and other incentives to prod companies to change behavior. In Xi’s China, it seems there’s less a strategy to raise its corporate game than official caprice taking out billionaires who attained too much power and influence. As his dragnet extends from tech to property to food delivery to education, investors are thinking more about which sector is in trouble next more than focusing on China’s rapid growth. Is healthcare in Beijing’s crosshairs next? The stated rationale for what’s afoot continues to evolve. Initially, it was all about curbing risk. Then it was about China avoiding a future in which tech giants tower over the economy the way Facebook and Google do in America. Now the spin is that China’s Big Tech putsch is about the yawning wealth gap. Fair enough. But the more China takes out the billionaire founders innovating and creating new good-paying jobs, the harder it might be for a state-heavy economy to narrow the rich-poor divide on its own. Xi really does have a plan here, he might want to let foreign investors know what that might be."
China Moves to Reassure Global Banks and Investors After Market Rout - WSJ - "China moved to ease investor concerns about crackdowns on listed companies, with a top regulator privately telling global financial firms that Beijing will consider the market impact before introducing future policies, people familiar with the matter said... The securities regulator’s private comments come after a massive selloff over the past week in the shares of Chinese companies listed in the U.S. and Hong Kong. The Hang Seng Tech Index, which includes stocks such as Alibaba Group Holding Ltd. , Tencent Holdings Ltd. and Meituan, dropped 14% in a week, as the selloff spread from shares of after-school tutoring companies to a broad swath of Chinese tech firms listed abroad. The selling also spilled over into the Shanghai and Shenzhen stock markets and caused the yuan to weaken against the U.S. dollar."
Why is China smashing its tech industry? - "the crackdown on China’s internet industry seems to be part of the country’s emerging national industrial policy. Instead of simply letting local governments throw resources at whatever they think will produce rapid growth (the strategy in the 90s and early 00s), China’s top leaders are now trying to direct the country’s industrial mix toward what they think will serve the nation as a whole. And what do they think will serve the nation as a whole? My guess is: Power. Geopolitical and military power for the People’s Republic of China, relative to its rival nations."
