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Jack Ma has lost nearly $11 billion, according to the media, since he began his conflict with the Communist Party of China (CCP) last October 2020. This year Ma’s fortune reached $61 billion, but his assets fell to $50 billion in two months.
In addition, the news portal Yahoo News reported the 56-year-old billionaire’s whereabouts are unknown, since he has not been seen in public for two months.
The Chinese regime seeks stability; businessmen are “free to innovate until they step on the party’s toes,” and then back off and follow the rules of the CCP, said Kendra Schaefer, a member of the China-based strategic consulting firm Trivium.
The party’s message was felt when the regime prevented Jack Ma’s business conglomerate, Ant Group, from going public in China and Hong Kong last November 2020, where it would be the world’s largest stock exchange.
According to the international press, Ant Group raised “$37 billion in its Asian listing, valued at more than $280 billion,” but Chinese financial regulators suspended the listing citing stricter regulations to protect the national interest.
The new regulations will force Jack Ma to rethink his business model of being a bridge between borrowers and banks, the media reported once the suspensions occurred.
For its part, The Wall Street Journal reported that the Chinese businessman proposed to the CCP financial regulators to “take any of Ant’s platforms, whenever the country needs them.
Jack Ma, with his firm Ant Group, will have to raise more capital to support the loans he makes to clients and seek national licenses to continue operations, as reported by Chinese regulators at the time of the IPO.
The personal data and financial arm that technology conglomerates have of millions of consumers represents a threat to the regime, which fears that technology entrepreneurs could use the information to enter other markets where the CCP already has control.
For example, “DIDI the courier and cab company that competes with apps like Uber, in China also functions as an online lender,” since it has privileged access to information about its clients that allows it to extend its portfolio, Nikkei informed.
The CCP’s fear of losing censorship power
The dimensions of the problem are that technology conglomerates like Jack Ma’s, Ant Group, have direct access to information on more than 700 million people.
This corporate power is sensitive for Beijing, as it loses control and censorship power over developments in new social networks, news portals, live broadcast and short video channels and applications, in addition to online credits.
According to the Financial Times, Alipay, Alibaba’s payment application, has around 700 million active users, while Tencent’s WeChat Pay had more than 800 million by 2019.
Financial Times said technology developer Tencent controls “about 79.4 percent of small and medium-sized merchants in China were using its payment services for business as of January 2020.”
Most online trading applications, according to the Nikkei Asia newspaper, make easy loans to Chinese citizens, putting China’s financial system at risk, which alerts the CCP Bureau.
In the wake of the COVID-19 pandemic, Beijing authorities have intensified monitoring and increased censorship of new content, preventing countries in the West and the rest of Asia from having timely information about the virus.
It is worth remembering that the world learned about the virus thanks to the messages that Dr. Li Wenliang published in social networks. Even his subsequent sanction by the Li regime was published in Chinese media and apps that were immediately censored. The internal control of information also worries members of the CCP, who fear that citizens will react en masse to any difficulties.
Nikkei says, for example, that “more than 15 million users of the Ofo bike-sharing app were unable to get their deposit money back after the company suffered a cash crisis in late 2018,” causing widespread unrest among internet users.
The regime as regulator and owner, the only visible solution for Jack Ma
One of the problems exposed by the Chinese regime to suspend Ant Group’s offer on the Shanghai and Hong Kong stock exchanges is the monopoly on e-commerce.
According to the Financial Times, China has allowed monopolies on the grounds that they represent competitive companies abroad, but with Internet companies the guideline has been different.
Nationalizing some of the Internet companies is a possibility, a Beijing-based government adviser said, according to The Wall Street Journal report. Information control is a crucial part of China’s economic development in the era of artificial intelligence, national security and citizen control.
The CCP’s solution to ending the monopolies is for the government to participate in the companies as a co-owner. Jack Ma’s offer is not new for a country whose regime has part of the largest companies. Beijing is co-owner of the largest infrastructure companies in the country, such as China Harbour Engineering Company, which has major projects worldwide.
At the same time, in China the banks, means of transport and communication are mixed or completely state-owned, Jack Ma simply follows the rules of the other businesses.
According to press reports, Chinese financial regulators have not made any pronouncements on Ma’s offer, but it is clear that the new regulations will open the way for Beijing to play a greater role in online business.
“China plans to empower its technology companies by making them strong enough to compete with companies like Google, Facebook and Uber abroad,” Kendra Schaefer told Nikkei Asia.
If Jack Ma’s offer, in which China becomes a partner of Ant Group, is finalized, the CCP would have access to the information of domestic and foreign clients of the technology conglomerate.
The Trump administration is considering sanctioning Jack Ma’s business group for being an arm of China in the United States that puts national security at risk. Reuters reported that the State Department submitted a proposal in October 2020 to have the Ant Group placed on the commercial blacklist, which would prevent the Chinese group from accessing technology from U.S. companies.