The Chinese communist party in their quest to intimidate large scale businesses and their founders, have begun their long-awaited crackdown on big businesses that refused to endorse the Party’s repressive policies. The recent disappearance of one of the richest men in the world, Jack Ma, is telling of the CCP’s tactics of intimidation through coercive means. This has invariably caused an environment of fear amongst other business owner that had previously raised similar concerns.
Valued as one of the largest business groups in the world before the prosecution of Jack Ma, the Ant group was on its way of seeking an IPO of $34 billion in 2020 before it was abruptly stalled by regulators at the behest of the Chinese Communist Party. The sudden halting of the IPO was seen as an indication of the CCP’s intention of prosecuting conglomerates and their owners who rather chose to speak against a faltering financial system. In October 2020, a speech by Ma in Shanghai criticizing the Chinese financial establishment was widely interpreted as the trigger that led to the proceedings against one of the largest business firms to have been established in China. He openly stated that the Chinese regulatory framework was restricting innovation in the tech industry while the Chinese banks were operating in a pawnshop mentality. This invariably caused a significant amount of discomfort within many members in the Party, hence also leading to the downfall of one of the wealthiest men in the world.
In 2021, the Alibaba group, a subsidiary of the Ant Group, was fined with the highest ever anti-trust penalty to ever be imposed on a firm in China’s financial history. China’s State Administration for Market Regulation (SAMR) declared that it was imposing 18.2 billion yuan fine on the firm equalling to about 4% of the company’s domestic revenues in the preceding years.
More recently, in pursuance of the same method, China has initiated a revision of Chinese law deeming certain practices deployed by large platforms such as Alibaba, Tencent, J.D.com amongst others as illegal. Reports have also indicated that the CCP is in the process of imposing a $1 billion penalty on the degraded Chinese firm, making it the largest regulatory fine to ever be imposed. As part of the overhaul the Ant group has also been asked to restructure its management and incorporate tighter regulatory supervisions by affiliate institution of the Party. The Ant group, has also been forced to turn itself into a financial holding firm as similar to a financial bank.
A far more serious change for the multi-billion-dollar company, however, has been the coercive policy of sharing its treasured data of more than 1 billion users with state affiliated firms and agencies for discriminatory use. In order to strong-arm the largest business group in China, the CCP had detained and discretely imprisoned Ja Ma, the founder of the business group due to their non-adherence and public criticism of the policy as whole. This move has widely been seen to have far reaching consequences not only on the economic viability of the business group, but also against the basic privacy rights of the citizens. It would in any case, not be an overstretch to state the intimidating methods of the CCP to extract personal data has caused some serious concerns within foreign investors that have invested in the country, leading many to be sceptical regarding the unconducive business environment in the country.
The crackdown against some of the biggest businesses and their heads, however, has not been a new phenomenon in Chinese politics. In the recent years, many such businessmen who refused to toe the party’s line have either disappeared, been kidnapped, prosecuted, imprisoned and even sentenced to executions. Xi Jinping’s anti-corruption campaign has more often than not remained the veil under which the CCP has managed to forcefully convince big businesses to follow the Party’s dictates, causing some serious apprehensions within the business industry in China. For instance, the chairman of Huarong Asset Management, a company worth $300 billion in assets and one of the largest asset management companies in the country, was sentenced to execution as a sentence for a bribery charge. The majority stake in the firm was owned by the Chinese Ministry of Finance. Similarly, one of China’s top insurance regulators as well as chairman of the Agricultural Bank of China, Xiang Junbo, was prosecuted and sentenced to 11 years of prison.
At present however, the tech industry seems to have a strong target on their backs due to stringent action taken by domestic political establishments against the industry. The founders of China’s tech giants such as ByteDance, Pinduoduo, and Meituan have either stepped down or have been threatened with severe consequences owing to their resignations. Jack Ma’s prosecution is just but a small mention in the list of founders, politicians and other important personalities that have come under scrutiny due to their divergent views than that from the political establishment in China. A secondary course of conflict has been the reluctance by various tech firms in providing personal data of users to government agencies. Ant group and its subsidiaries were forced into conceding at the behest of their founder’s public humiliation at the hands of the CCP.
Thus, it is clear that the Chinese communist party has taken up some serious methods in order to force multi-billion-dollar gigantic firms into following the party’s will and vision. Companies that have sought to function in differing fashion have either met their demise or have been forced in to mandatory restructuring allowing the CCP to have a greater say in the functioning of the private firms. The revision of local laws making certain practices illegal are part of the same strategy enforced by the CCP of crippling the day-to-day functions of big firms. Technocrats and businessmen have been compelled to fall in line or face public humiliation and imprisonment at the CCP’s behest. This had led to wide-spread apprehensions within China regarding the safety of not only the persons concerned, but also of the fragile economy that cannot afford an economic meltdown. It is prudent to state that such unprovoked sanctions and an oppressive business environment can lead to unwarranted economic consequences, one which even the CCP may not be able to handle.