Chinese regulators on Alibaba Investigation; founder Jack Ma has not appeared in public since Oct 24

China’s market regulator launches an antitrust investigation into Alibaba, and Alibaba’s co-founder Jack Ma has not made any public appearance since October 24th. According to the online Chinese financial news portal Caijinglengyan.com, Alibaba may gradually be nationalized in the time to come. In other words, the company’s popular payment method Alipay may be frozen, and Jack Ma may be made to “disappear” by the CCP.

Distrust within the Party
On December 24th, China’s State Administration for Market Regulation officially announced an antitrust investigation to be made into Alibaba Holdings. On that same day, the People's Bank of China announced their official interviews to be conducted with Alibaba. Other financial regulators, including China Banking Regulatory Commission, China Securities Regulatory Commission, and Foreign Exchange Bureau also followed suit.

But while Caijinglengyan reports that the current investigation seems to still be at the commercial level, things could change swiftly. Since Jack Ma is a Chinese Communist Party member, if the CCP’s Central Commission for Discipline Inspection targets Jack Ma in the future, then the nature of this investigation could completely shift.

Discipline inspection is another option for the Communist Party; a technique that was used in the investigation of Ren Zhiqiang. After openly criticizing top CCP leadership, Ren was accused of corruption by the CCP which led to a one-day trial. The verdict turned Ren from a Chinese real estate tycoon belonging to the second generation of founding CCP officials, to a prisoner sentenced to 18 years of prison. It depends, according to Caijinglengyan, on whether the CCP will take a heavy hand against Jack Ma.

Regarding the series of regulatory actions taken by the CCP against the Alibaba Group, Caijinglengyan presented several key observations.

First, Alibaba is the CCP's first antitrust target. It remains to be seen whether other big Chinese tech companies will be next.
Second, Alibaba’s co-founder Jack Ma likely has been involved in the power struggle within the CCP. Even though Ma has the support of the camp under Jiang Zemin, the former head of the CCP, Ma may not be able to escape oppression.
And third, Jack Ma offered to hand over parts of his financial-technology giant, Ant Group, to the CCP prior to Ant’s planned IPO. However, the IPO’s failure to launch and the current investigations into Alibaba both point to obstacles he is facing.

A Battle for Power
Caijinglengyan explains that the CCP is worried that billionaires such as Jack Ma would have political demands, as Jack Ma has publicly stated that "the best business model is to build a country.” This ignited fear in the top CCP leaders’ hearts.

Moreover, to the CCP’s dignitaries, Jack Ma is not a member of the second or third generation of CCP founding officials, but has something much more powerful: a business empire that not only affects the lives of almost all Chinese people, but can even shake the CCP’s roots of power in China. This may also be the driver of the antitrust investigation.

Alibaba's Internet empire didn’t cooperate with the CCP in building a large database, while Ant Group's data remained independent from the CCP's Central Credit Information System. These may also be the reasons that the CCP has been attacking Alibaba.

As for the next steps of Alibaba and Jack Ma, Caijinglengyan believes the CCP’s state-owned banks and financial institutions will buy shares in the future, eventually possibly even taking over the Ant Group. The payment function, Alipay, may also be frozen.

As Chinese authorities have prohibited Jack Ma from leaving China, his future remains uncertain. He could face anything from imprisonment like Wu Xiaohui, founder of Anbang Insurance Group, to death from an accident like HNA Chairman Wang Jian, to simply just disappearing.


Production: Hanson, Sophia
Date: Second 2, 2020
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