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Is Beijing about to make Jack Ma an example?

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Editor’s Note: Every Wednesday, WPR contributor Rachel Cheung and associate editor Benjamin Wilhelm host the week’s top China news and expert analysis. Subscribers can adjust their newsletter settings to receive China Note by email weekly.

Speaking at a financial conference in Shanghai last fall, Jack Ma, China’s most famous entrepreneur, began his speech with a warning: “If you think my advice doesn’t make sense, forget it. But Beijing never forgets and certainly does not forgive.

The charismatic billionaire then gave advice at the Bund summit, as he likes to do in public speeches. He lambasted Chinese banks for their “pawnshop mentality” and regulators around the world to stifle innovation. “Europe is grappling with its aging system, but China’s problem is the opposite because the Chinese financial sector basically has no system,” he said, triggering a series of laughs from the crowd. part of the public.

At the highest level of the Chinese government, his words fell on less enthusiastic ears. A week after the speech and days before the much-anticipated IPO of its group Ant, the world’s largest financial technology company.the People’s Bank of China and three other regulatory agencies summoned Ma and two frames of ants for a bandage. Shortly after, Ant Group’s $ 37 billion listing in Hong Kong and Shanghai, expected to be the world’s largest IPO, was suspended.an order allegedly given by Chief Xi Jinping himself.

The botched IPO was just the start of an unprecedented crackdown on Chinese tech giants, whose aggressive expansion and vast influence made Beijing uncomfortable. Authorities launched anti-monopoly investigation into Alibaba, sending investigators to its Hangzhou campus on Christmas Eve. In a public statement, the People’s Bank of China, the country’s central bank, ordered Ant Group to go back to its roots as a payment service provider and “strictly rectify illegal financial credit, insurance and wealth management activities”. Taking a sharp turn after years of laissez-faire control, the Chinese government intensified a closer examination of the financial sector and slapped new rules on online lenders which will eat away at Ant Group’s financial results.

Recent remarks from Chinese officials suggest there is more to come. This week, Zhang Gong, head of the State Administration for Market Regulation, pledged new efforts to target monopolies and unfair competition in the coming year – a statement that was quickly echoed by Chinese law enforcement. To reduce financial risks, tech conglomerates are under pressure share data on consumer loans with credit agencies operated by the People’s Bank of China.

Having lost Beijing’s grace, Ma is now in bed. He did not appear as a featured judge on an African talent show produced by his philanthropic organization, and his photograph was replaced in promotional material for the event. To keep a lid on the inside cover and speculation, China’s vast propaganda arm censored unapproved analyzes and instructed news organizations to strictly follow the official account of the Alibaba investigation.

“There is an underlying political message, that no business, or individual, can grow so large in China to the point where they can potentially challenge the authority of the CCP,” Richard McGregor, senior researcher for Asia from the East at the Lowy Institute in Sydney, told AFP, referring to the Chinese Communist Party.

As for what will become of Ma, the tragic endings of the business tycoons that have drawn Beijing’s ire serve as grim warnings. Sun Dawu, an entrepreneur known to champion local farmers and the agricultural industry, has been detained since November due to a land dispute with a state farm. In September, Ren Zhiqiang, a former real estate mogul who earned the nickname “Big Cannon” for his harsh criticism of the regime and criticized Xi’s handling of the coronavirus pandemic, was jailed last fall for 18 years for corruption. Last week, Lai Xiaomin, the former chairman of state-owned Huarong Asset Management, was sentenced to death for bribes and corruption; the court said his actions “endanger the financial security and financial stability of the country.”

My, currently the third richest man in China, could also be an example.

Rachel cheung

Top Read on China

The Trump administration leaves Biden with tough decisions in Taiwan: “Within days of his tenure, the Trump administration has put aside long-standing policies towards China and Taiwan, both raising expectations and placing new constraints on how the Biden administration will deal with his biggest geopolitical competitor ”, Gerry Shih and Lily Kuo write for the Washington Post. On Saturday, Secretary of State Mike Pompeo said the United States would relax government rules banning interactions between U.S. and Taiwanese diplomats, a move that amounted to a “symbolic but significant” improvement in U.S. relations with Taiwan, as ‘said Shih and Kuo. The eleventh hour policy change “will force the Biden administration to make difficult, and potentially politically costly, decisions” when it comes to Taiwan, Shih and Kuo report:

“If the new administration explicitly embraces the change, it gets volatility and an adversarial relationship with China, which the Trump and Pompeo team wanted,” said Evan Medeiros, professor at Georgetown University and former senior director for President Barack’s Asia. Obama’s National Security Council. “If they reject it, they have a political problem and a problem with Taiwan. The whole question of contacts will become a new metric in the US-China-Taiwan relationship. ”

In the news this week

China’s reaction to the U.S. Capitol Riot: “China’s official propagandists could barely contain their schadenfreudeAfter a crowd of Trump supporters violently stormed the US Capitol last Wednesday, the Washington Post reported. Some Chinese state media have even dubiously equated the riot with pro-democracy protests in Hong Kong.

US-China relations: China on Saturday released new rules that ban Chinese companies and citizens to comply with foreign laws and sanctions that it deems “unjustified”. The rules are countermeasures against US restrictions on Chinese businesses (Wall Street Journal). … The United States Tuesday canceled the planned trip to Taiwan by its Ambassador to the UN, Kelly Craft, as well as all other high profile trips abroad, attributing the decision to work on the transition before Joe Biden takes office on January 20. Craft’s visit sparked strong opposition and a warning from China (Associated Press).

Hong Kong: Hong Kong’s largest mobile telecommunications companies appear to have blocked a website listing personal police information, a sign that the city could adopt censorship tactics used in mainland China (New York Times). … Hong Kong police seized more than 200 electronic devices among 53 people arrested last week for suspected crimes under the city’s national security legislation. The Washington Post reported that authorities have started shipping the devices to mainland China, “where authorities with sophisticated data mining technology use information from these devices to aid investigations.”

Covid19 pandemic: Brazilian health officials said on Tuesday that the CoronaVac vaccine, developed by China’s Sinovac Biotech, has been shown to be 50% effective in late stage trials, much lower than initially indicated. The Sao Paulo-based Butantan Institute said last week that the CoronaVac vaccine was 78% effective and offered full protection against severe cases of COVID-19 (Financial Times). … China accepted enable a team of experts from the World Health Organization to enter the country to investigate the origins of the coronavirus pandemic after the agency’s top official criticized Beijing for delaying the mission (Wall Street Journal). … China has more than 28 million people on lockdown as he battles a new wave of coronavirus infections. The National Health Commission on Wednesday reported a total of 115 new confirmed cases, mainly concentrated in the northern province of Hebei, which surrounds Beijing.

National: A viral video online posted on Monday showed a delivery driver who had worked for Alibaba self-immolating in protest against unpaid wages, reiterating concerns about the mistreatment of workers in China’s booming tech sector (Financial Times). … “The rescue teams were on Tuesday race to save 22 workers trapped underground for more than two days after an explosion at a gold mine under construction in eastern China, as state media criticized a 30-hour delay in reporting the accident, ”according to Reuters.

China-Australia voltage: Australia blocked $ 231 million takeover bid by a Chinese state-owned construction company for an Australian company involved in several large-scale projects, citing national security concerns (Reuters).

Benjamin wilhelm

Rachel Cheung is a freelance journalist based in Hong Kong. Her work has appeared in the Los Angeles Times, Washington Post, and Nikkei Asian Review, among other media, and she was previously a reporter in the South China Morning Post’s culture bureau.

Benjamin Wilhelm is the associate editor of WPR.

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