U.S. media: Chinese Communist Party crackdown on Jack Ma affected state agencies, stalwarts

The Chinese government is investigating how Jack Ma obtained fast-track approval for the listing of his Ant Group shares last year, the Wall Street Journal reported, suggesting that the crackdown on the tech billionaire is spilling over to state authorities.

The paper noted that Ant Group’s business model, a lending model powered by big data, could jeopardize China’s financial system in the eyes of top Communist Party leaders, in part because the company’s banking partners bear most of the risk. One of the leadership’s other concerns is that among those expected to benefit from the world’s largest IPO are well-connected individuals and institutions, some of China’s influential political families and large state-owned funds.

The investigation examined Ma’s ties to these state stalwarts, the people familiar with the matter said.

What’s happening is deeply embarrassing for regulators,” said Martin Chorzempa, a researcher at the Peterson Institute for International Economics, a U.S. think tank that specializes in Chinese fintech. It’s embarrassing for regulators because they should have coordinated more effectively before approving the IPO.”

The listing standards and procedures set by the China Securities Regulatory Commission and the Shanghai securities regulator are currently under review. According to some officials with knowledge of the situation, Ma had discussions with Li Qiang, secretary of the Shanghai Municipal Party Committee, before announcing the Shanghai listing. Li was the former governor of Zhejiang province, where Ma’s business empire is based.

But the Wall Street Journal reported that representatives of the central and Shanghai securities regulators, the Shanghai government, China Life and CIC have not responded to questions about the issue.

Reuters reported that in response to the fact that Communist authorities are investigating Ant Group’s listing approval process, the Hong Kong exchange said, “This is an isolated incident that we are not comfortable with and will not discuss.”