An American newspaper has revealed the reason for the tension between Chinese authorities and Jack Ma, the founder of the giant Alibaba company. Chinese authorities have concluded an unannounced investigation into the ultimate beneficiaries of the initial public offering (IPO) of Ant Group, Alibaba's financial and technology subsidiary, which has raised concerns and strained relations with one of the wealthiest businessmen in the world.
The Wall Street Journal reported today that Chinese authorities prevented Ant Group's IPO, which was set to become the largest in history, late last year due to worries over the ultimate beneficiaries involved in the transaction. The investigation indicated that, weeks before the planned IPO, Chinese authorities completed a covert investigation revealing that Ant had not disclosed the complex structure of its managing entities and shareholders. The investigation suggested that behind the opaque investment mechanisms were entities linked to influential families and political figures, posing a challenge to President Xi Jinping, particularly referencing billionaire Jiang Zemin's grandson, Jiang Zisheng, who had a longstanding partnership with Jack Ma and was previously implicated in Xi’s anti-corruption campaigns targeting many of his allies.
The newspaper pointed out that the inquiry into Ant's management structure and Ma's public criticisms of the authorities resulted in the decision to halt the IPO. Ant Group denied lack of transparency, asserting that it disclosed all investors in its IPO documents. The company owns the Alipay app, used for mobile payments by over a billion people, and holds financial data on a vast number of individuals. It has provided loans to nearly half a billion people and manages the largest financial fund in the country, alongside offering various other financial services. This, along with concerns that company-linked investors could potentially gain about $300 billion from the IPO, alarmed Chinese authorities.
In late October, Jack Ma sharply criticized Chinese government agencies at the Shanghai conference, arguing that their regulations stifle technological development and innovation. Following his 20-minute oral manifesto at the conference, which included a barrage of sharp critiques against China's economy—characterized as being controlled by "a club of old-timers" catering to the interests of a handful of traditional banks likened to "pawn shops"—Chinese officials were angered. Ma's fiery remarks against the Chinese financial system drew the attention of senior officials, leading to the unexpected suspension of Ant's IPO shortly afterward, believed to be linked to his controversial speech. Consequently, the Chinese government instructed the giant fintech company, which had flourished in a relatively relaxed regulatory environment, to "correct" its operations according to the law. Additionally, Chinese regulators launched an unprecedented investigation into Alibaba regarding suspected monopolistic behavior.
