A documentary about scandals in the Chinese business world puts new pressure on the remnants of the empire of tech billionaire Jack Ma.
A documentary by Chinese state television CCTV reveals a huge corruption scandal in the city of Hangzhou, in the eastern province of Zhejiang. The report is the fifth part in a series titled “Zero Tolerance,” which depicts the fallout from Chinese President Xi’s anti-corruption campaign.
CCTV believes that some private companies in Hangzhou have been guilty of bribing a (former) party head of the local branch of the Communist Party. As a result, the companies would have been able to enjoy advantages when buying real estate, writes The Financial Times.
Although Alibaba and Ant Group, two companies owned by the well-known Chinese entrepreneur and tech billionaire Jack Ma, are not named in the documentary, Ant Group is clearly the main person involved in the scandal. Ant Group is said to have bought two pieces of real estate at hefty discounts in Hangzhou in 2019. Furthermore, the company would also have invested in payment companies of the brother of the party official mentioned in the report.
Again under the microscope of Beijing
Whether these allegations make sense or not is irrelevant. The documentary once again puts all the spotlight in China on Alibaba subsidiary Ant Group and Jack Ma himself. The fintech company has been put under the microscope of the Chinese government several times in recent years.
At the end of 2020, Ant Group was obliged to pull the plug on a planned IPO in Hong Kong and Shanghai worth $34 billion to pull. That was a signal that no private company in China should be too ambitious without express permission from the central government in Beijing.
In April 2021, Ant Group was again forced to major restructurings by the government. The company should be more transparent towards the government and also follow strict capital rules. That same month, parent company Alibaba was slammed by Beijing with a record fine of 2.3 billion euros.
In the weeks that followed, Ma quietly withdrew from public life. Meanwhile, Ant Group decided to cooperate with the Chinese government by massively transferring data from citizens. They will be used to build the infamous credit score system of China, where violations of the law will deprive people of access to loans and other financial facilities.
The last blow for Ant Group for the time being dates from last week. Then a state asset manager allegedly withdrew, without explanation, from a deal to pump assets into the fintech player’s lending arm, it knows The Financial Times.
Crush the symbol for entrepreneurship in China
While the documentary is circulating in China, Ma tries to keep a low profile. Ant Group and Alibaba are quietly preparing for the legal battle that will no doubt soon break out over this scandal. Xi Jinping’s great ambition for China’s future is to install a “shared wealth”, where all connection between capital and political power must disappear.
Jack Ma, an entrepreneur in heart and soul, is a symbol of the giant tech innovations that China has been able to realize in recent decades. But it is also a symbol of an enterprising side of Chinese society, which also gets along well with the free markets of the Western world. A symbol that Xi will have to shrink if he wants to realize his ambitions for China.
“The rise and fall of Ant Group embodies the unequal relationship between business and politics in China,” Nie Huihua, professor at Beijing Renmin University, noted in a statement. The Financial Times. “It will now have to pay a price for that.” (ddw)
–
