The political fallout from the shutdown of Ant Group’s $35 billion IPO has been felt for days, and there has been much debate from all walks of life.
Some political observers have judged that the largest fund-raising case in history should be ordered by Chinese President Xi Jinping to be blocked, because Ant founder Jack Ma’s influence is too great, and there are anti-Xi shareholders lurking inside the ant, challenging the authority of Xi’s core. As for Ma’s 20-minute speech at a financial summit on the Bund in Shanghai in late October, it was the fuse.
Observers said Ma’s public criticism of China’s regulators severely “slapped the face” of the financial gang led by Vice President Wang Qishan angered top Communist Party officials.
The listing of ants was approved in advance by the Communist Party’s financial gangs and regulators, but it was suddenly overturned two days before the IPO, he said in an interview with the Voice of America on Monday (Nov. 9). Of course, he said, Ma’s approval of China’s regulatory system at the financial summit on the Bund was worthless and put a face on Wang Qishan and the Securities and Futures Commission, among others.
Lin Baohua said that Xi Jinping should not know anything about finance and originally couldn’t manage that much. As a result, the financial gang, led by Wang Qishan and dominated by the faction of former Chinese premier Zhu Rongji, is still very powerful these days. This can be seen from the fact that under the Xi-Wang system, no financial heavyweights have yet been purged, “because Wang Qishan let them off the hook”.
Lin Baohua: Ma’s father challenges Xi’s authority
However, Lin Baohua also said the disagreement between Xi and reformist Wang Qishan appears to be deepening, and Ma should have had a chance to fight Xi with Wang Qishan, but instead he has made high-profile use of Alibaba and Ant to list in Hong Kong to “make money” and recently reapproved the financial gang, giving Xi an opportunity to use the financial gang to fight Ma.
In late October at a financial summit on the Bund in Shanghai, Ma criticized the Chinese banking sector for its “pawn shop mentality” about mortgaging loans. He also raved that “there is no system in China’s financial sector, nor is there any systemic risk,” and criticized Basel as an outdated “old man’s club” for setting risk standards.
Lin Baohua said through the comments: “This is not simply a struggle between factions within the Chinese Communist Party, but a challenge by Jack Ma to the authority of Xi Jinping, and even to the authority of the Party. …… The resignation of Jack Ma from the Alibaba Group board seat two years ago was not just a challenge to Xi Jinping’s ‘state advancement and retreat of the people’ (the impact of the policy), but rather Jack Ma’s ‘wealthy and powerful’ formation of a challenge to the CCP and Xi Jinping, as well as the CCP’s usual coveting of any wealth. “
He said it is puzzling why Ma, who was forced to retire, did not keep a low profile, but still made a big show of offending the financial gang at the Shanghai Forum. However, Lin Baohua believes that if Ma can deal with his relationship with the Financial Gang properly, the gang should let him off the hook, as their common enemy is Xi Jinping. The company’s main business is to help the Chinese government to improve the quality of its services, and it is also working hard to improve the quality of its services,” he said.
Xie Jinhe: Are the ants a collection of anti-Xi factions?
In Taipei, a veteran media personality and chairman of Caixin Media, Xie Jinhe, scrutinized the reasons for the blocking of the IPO case from the shareholder structure behind the ants. He believes that Jack Ma has always been a sharp speaker, it is unlikely that a single public statement will cause the entire IPO case to be shut down. As a result, he speculated, “Ant’s IPO could see its market capitalization skyrocket to more than $400 billion, but what if Ant has shareholders who are anti-practice? This power is not insignificant, so perhaps this is a strand.”
Ma is rumored to be a member of the Jiang faction and a close friend of Jiang Zhicheng, the grandson of former Communist Party General Secretary Jiang Zemin, who is also the manager behind one of the original shareholders of Ant, Boyu Capital (about 3% of Ant), as well as other shareholders including, Guo Guangchang, the founder of Fosun, Shi Yuzhu of Giant Group and Lu Zhiqiang of Tonghai Holdings, who are pro-Jiang faction corporate figures. Also, like Xiao Jianhua, founder of Tomorrow Group, Ma is rumored to be a money-laundering tool for the second generation of the Communist Party’s powerful and influential Red Group.
A former political science professor at Renmin University, who wished to remain anonymous, described the ant case as “unintelligible.” He told Voice of America that it is common sense in China that the average businessman cannot challenge the powers-that-be or regulatory units. But Ma Yun is not an ordinary person, speaks with a certain degree of influence, and the ant shareholders in the Jiang Pai, the second generation of red have, the power is not small, these all make it difficult to see the reasons for the real ant blocked.
A Reuters report last Friday (Nov. 6) cited five people with knowledge of the situation, including two people close to Ma Yun said they originally suggested that Ma Yun slow down his criticism a bit because a senior Chinese financial official would be present at the Shanghai financial summit, but Ma Yun did not listen and “insisted on being himself and spoke freely. “
Reuters report: top brass rattled
Reuters also quoted two unnamed Chinese government officials as saying that senior Communist Party and government officials were outraged by Ma’s remarks and took them as a “slap in the face” to the regulator, in response to the destructive power of his public remarks. The executives then asked for an “investigation” of the ant’s business model, and made a report, which was sent to “including Xi Jinping” and other leaders at all levels for review, which led to the executives’ subsequent blocking of the ant case.
Reuters also interviewed more than a dozen interviewees, of which nearly half agreed that Jack Ma’s speech at the Shanghai financial summit was the trigger for the listing of the case was blocked.
Regardless of the reason for the blocking of the ant, Hong Kong senior publisher Yan Chun-hook through Facebook, entitled “Ant Financial Services before the fall, Ma Yun’s good days are over,” the comments.
He wrote: “Doing business in China, the indispensable self-knowledge is that the business can not be too big, too big would have been okay, as long as the CPC can control it, but a business is too big, so big that the CPC does not hold a firm hold, that is the problem. Jack Ma is very smart in business, learning advanced foreign technology to get started quickly, and being creative himself, so the business flaps more and more, getting bigger and bigger, so big that the CCP can’t stand it, and then that’s the end of Jack Ma.”
For his part, Chinese University of Hong Kong professor Lin He Li said in an interview with Voice of America that, in all likelihood, Ma’s statements have annoyed the Chinese establishment and regulatory units, and that his relationship with the CCP is already in trouble. However, these speculative rumors have yet to be confirmed.
Lin and Li: Business people avoid public criticism of CCP
But he said it was certain that the killings had left a negative impact on the reputation for professionalism and efficiency of China’s regulators. Lin said private businesspeople may also take a cue from Jack Ma and keep “writing on the wall” in their minds in the future, not only to strengthen their ties with the Communist Party, but also to keep quiet in public and refrain from publicly criticizing the central government to avoid punishment or retaliation.
While opposing Xi’s motives for fixing the ants and the chilling effect it could have, Lin Baohua said the online small loans that the ants engage in are too risky and there are too many users. It’s a good idea to use a chant-chanting, loan-chanting platform to easily borrow money for consumption, in case of high debt, as if it were a card slave or “Manu”, as long as the young people can not afford to pay, a wave of defaults, the social order and financial stability of the system is too great. In addition, the timing of its listing stuck in the economic downturn during the epidemic period, Lin Baohua said, the Communist Party is worried that the central bank’s release of bailout funds will flow into Jack Ma’s pocket, or the future share price decline, investors suffer, so it seems not unreasonable to strengthen the risk control mechanism.
However, veteran venture capitalist Qi Yuan Huang, president of Lantao Asia, disagrees. He said China’s top financial regulator’s crackdown on Jack Ma and the ants is “a crime to be punished and no excuse.”
After the ant listing case shouted cards last week, regulators such as the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) have been stating their stance on strengthening financial regulation. Last Friday, the People’s Bank of China vice governor Liu Guoqiang through a press conference, even called on the travel capital to invest in the real economy, “not to play the game of money.”
Liu also cited that the number of P2P lenders actually operating in mainland China has been squeezed down from a peak of about 5,000 to the current three, according to Lianhe Zaobao. The size of lending and the number of participants have declined for 28 consecutive months.
Huang Qiyuan said the CCP is now “showing muscle” through the ant case because “mainland China is centralized, so he won’t let private companies or individuals have too much influence …… Ma’s criticism (of lagging regulation) has really angered the regulatory unit.”
Huang Qiyuan said: “Many celebrities in China have been arrested and Jack Ma (Ma) has resigned (from all his positions), but he still has a lot of influence, probably because he is too powerful and influential. The competent authorities cannot tolerate it.”
He said it was “alarmist” for Chinese regulators to compare Ant to a P2P private online lender because, in his view, Ant was not a P2P private online lender. The real essence of ants is to use technology to serve the financial industry, rather than investing in it itself and becoming a financial service provider.
Internet fintech industry under political suppression
Huang Qiyuan said Ant is to cooperate with big banks, and then use technology capabilities and platforms such as AI (artificial intelligence) and big data to serve individual consumers or small and micro enterprises, analyze their credit risk, help bank customers develop the original untouched consumer and loan customers, and then, from the profit, in fact, is very smart business model.
According to Ant’s prospectus, as of June 30 this year, Ant’s platform facilitated credit loans to consumers and micro-enterprises amounting to CNY1.7 trillion (US$253.3 billion) and CNY400 billion (US$60 billion), respectively. In addition, Alipay, a subsidiary of Ant, has more than 700 million active users each month and serves more than 80 million micro and small e-commerce merchants and more than 2,000 financial institution partners. In the 12 months to June 30 this year, the total payment transactions handled in China exceeded 118 trillion yuan ($17.6 trillion).
As such, Huang Qiyuan believes that Ma’s call for the regulatory side not to lag too far behind financial innovation is, in fact, a good starting point.
He said that ant lending to small and micro enterprises is to support the real economy, of course, if people who borrow money to speculate lose money as a result and cannot pay back, they will also lose their credit, at that time, the ant’s system will also monitor and reflect that only lend money to individuals or enterprises with limited risk, and will not lend without restrictions. Therefore, he said, it is not fair for China’s financial regulator to keep labeling Ant by ignoring the three advantages it has created in financial inclusion, technological innovation and Internet finance platform.
Based on China’s impending tightening of capital and loan amounts for online small loans and other businesses, Huang Qiyuan raised his expectations. He said: “The ants that used to be able to crawl everywhere will only be able to crawl inside a small bowl, which will affect its profitability, but its IPO (public offering) will still start over, but it may have to wait a year, and the amount raised may be halved.”
The China Banking and Insurance Regulatory Commission (CBIRC) and the central bank had already drafted the Interim Measures for the Administration of Online Microfinance Businesses in early May this year, and announced on Monday (Nov. 2) that it was entering the public comment phase. It is expected to enter the next stage of legislation or implementation a month later, that is, on December 2, after the deadline for feedback from the public.
According to this measure, future online loans to individuals cannot exceed RMB 300,000 or one-third of their average annual income for the last three years. Loans to business entities or organizations cannot exceed RMB 1 million. The one-time paid-up registered capital for operating an online lending company must not be less than RMB 1 billion, and the minimum capital amount will be raised to RMB 5 billion if the company operates across provinces. In addition, in a single joint loan, the measures also stipulate that the capital contribution ratio of the microfinance company shall not be less than 30%, each of which indicates that the amount, capital contribution and leverage ratio of online small loans will be strictly regulated and restricted in the future.
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