This incident seems to be a mark in the column of the old argument that authoritarianism is bad for economic growth because of the ever-present potential for capricious action such as this.<p>While we should take the WSJ's preliminary reporting with a grain of salt, the Ant IPO halt was shortly followed by the announcement that Beijing was going to be looking at antitrust and monopolistic behavior by big tech. [0] The 'angered Xi and the old guard' narrative seems very plausible.<p>Also, if anyone's interested, here's a translation [1] of the speech Jack Ma gave that set off the commotion. Interesting bits about what he thinks of incumbent financial powers (or at least, what he says to that audience). It's also interesting to see what relatively mild comments could trigger this kind of reaction when power is so centralized.<p>[0] - <a href="https://www.bloomberg.com/opinion/articles/2020-11-11/china-s-antitrust-rules-will-threaten-alibaba-tencent-rivals" rel="nofollow">https://www.bloomberg.com/opinion/articles/2020-11-11/china-...</a><p>[1] - <a href="https://interconnected.blog/jack-ma-bund-finance-summit-speech/" rel="nofollow">https://interconnected.blog/jack-ma-bund-finance-summit-spee...</a>
Ants lending business has doled out 1.8T on 36B of cash from Ant itself. That's 50 times the leverage they financed through ABS, Asset Backed Securities, or in this case more accurately described as Debt Backed Security. We knew all about these 'financial innovations' in 2008.<p>The new regulation limits the leverage cap from infinite to about 15, closer to bank's 10. This limits risk, and is considered a reasonable move.<p>A truly desperate move would be to allow these bubbles to go ahead and IPO. Which almost happened, everything will be fine and dandy for a while, until it's not. Whether it's due to Xi's insecurity or not, I'd say that China dodged a bullet here.
The article follows the expected lines that hint Xi is kind of a dictator and is afraid to face any challenge from outside (which obviously satisfies the taste of my HN readers), but fails to ask the real question.<p>The real question that begs for explanation: The new lending law doesn't come out from nowhere. It was not drafted overnight, and was not drafted without the consultation of the target of regulation -- in that case, I'm also sure (but without hard proof as I'm just nobody) that Ant was one of the companies that the government inquired. So the real question is: Did Ant know about the regulation when it files for IPO, and if so, why didn't it disclose it?<p>A second question is: Ant and similar countries have been growing for years and years. Why does the government slam down the regulation in this year? This might not be a legitimate question though, as regulations usually come far behind, so it might be reasonable for the government to act slowly in this case. But still, I believe it's about time that some anti-monopoly law fells on head of companies such as Ali and Tencent. They are wayyy more powerful than they appear to be.
I like Cory Doctorow's explanation of the situation:
<a href="https://twitter.com/doctorow/status/1324391639628959745" rel="nofollow">https://twitter.com/doctorow/status/1324391639628959745</a>
Summary of the article: It's totally unclear what happens but here is some speculation.<p>This is just like during the USSR. Sovietologists were reading and and over-interpreting the signals. Now Chinatologists create narratives that try to fill the holes of our knowledge.<p>Details of Chinese government decision making and internal power struggles are not available to the outsiders. Even the intelligence agencies have hard time figuring what happens. And Chinese like to deceive.
I'm a bit confused about this article because it first states that Xi personally halted the IPO and then says "It was unclear whether Xi or another government official was the first to suggest the IPO suspension".<p>The reality and its implications aside, I don't find this article very informative.
I find it interesting the same headline and story can be interpreted as either:<p>1) Chinese government is totalitarian and corrupt and creating arbitrary rules for people and things they don't like and<p>2) Chinese government and regulators are doing their job, and this IPO and Ant in general are the ones rent seeking and playing it loose.<p>I suspect partially how it's interpreted depends on your political slant and how ones views China.
This is one of those weird cases where:<p>I could see legitimate regulatory concerns regarding Ant Group that would prevent an IPO.<p>At the same time this could be a much more personal fight too.<p>The question is of motivations and it's hard to know about any of that.
This is the future for the globe if China overtakes the US as the dominant power. This is why its so critical for the free world for the US to treat China as an opponent rather than a trading partner.
There's no way to run a business long-term in China without kissing CCP's ass.<p>I've been arguing for a while it is impossible for western companies to ever be successful (in the long run) in China, because eventually something happens that will pit the company against CCP. Make no mistake about it, CCP will win that battle.<p>If it's not some free speech battle (see NBA), then it's a Chinese competitor land grabbing your stuff with encouragement from CCP pushing you out.
Not surprising at all.<p>Contrary to what most people I know think, I think Xi Jinping and company are really scared. And the more scared they are, the more authoritarian they become.<p>They are afraid of Taiwan because Taiwan is the living example that China can prosper without the CCP.<p>They are afraid of Hong Kong because it's an example of resistance to the regime.<p>They are afraid of religions because no matter how much you punish someone, you won't be able to make them worship you instead.<p>They are afraid of wealthy people because they can taste freedom and they can vision a China without the CCP.<p>And so on...
I thought Jack Ma was smarter than this. He stepped down as Chairman of Alibaba precisely to avoid running afoul of the party. Yet he then disparages the party ahead of Ant’s IPO? Wondering how long until Ma is charged with fraudulent behavior and subsequent arrest.
Been wondering if "free market economy" still works the way we expect when other nations might not share the same core principles in governance ... checks & balances ... etc
This deleted $150 billion off of Ant's valuation. Yet the bigger news in China tech this week was the new proposed Anti-monopoly rules that wiped $280 billion off the market. [1]<p><a href="https://www.cnbc.com/2020/11/12/morgan-stanley-chinas-draft-anti-monopoly-rules-impact-on-internet-firms.html" rel="nofollow">https://www.cnbc.com/2020/11/12/morgan-stanley-chinas-draft-...</a>
The reuters article [0] offers more details on this. Perhaps these speech was a catalyst for this action, but scrutiny of the organization seems to be something that has long been in the agenda of the Chinese government.<p>[0]-<a href="https://www.reuters.com/article/ant-group-ipo-suspension-regulators/how-billionaire-jack-ma-fell-to-earth-and-took-ants-mega-ipo-with-him-idUSKBN27L2GX" rel="nofollow">https://www.reuters.com/article/ant-group-ipo-suspension-reg...</a>
This always happens in China when billionaire's there "overstep their bounds" and criticize the party. I wouldn't want to be Jack Ma right now. This may not end well for him. Those billions are his only as long as Xi wants him to have them.
The latest NPR Indicator podcast did a good job covering this: <a href="https://www.npr.org/transcripts/934251081" rel="nofollow">https://www.npr.org/transcripts/934251081</a>
Xi gave Ma the taste of <a href="https://en.wikipedia.org/wiki/Autocracy" rel="nofollow">https://en.wikipedia.org/wiki/Autocracy</a>
To add a bit more details I heard of:<p>* The clamp down on fintech has been on the agenda for a long time. Rooted in lessons learned from western crisis, the most recently, 2008 financial crash. The P2P disaster happened since 2018 [1]. The short boom and bust cycles in Chinese stock market [2].<p>* Totalitarian government controls all major aspects of economy is by design its right and purpose.<p>* Jack Ma made the speech not because he is sure of Ant IPO, but because he was angry that the IPO is bound to fail one way or another. So he was pissed off and made a rant speech. Listen the speech yourself, he is making grandiose claims, but meanwhile his version of innovation is nothing but copying the risky financial schemes that <i></i>already caused disaster before<i></i>. That's a true rant, the quality of thoughts is the lowest among all of Jack Ma's speeches which are already quite low when comparing him to others with similar status.<p>* Ant financial indicates a strong collusion between Jack Ma and Ant and some powerful people in CCP & government. Ant IPO price is 68.8, the stock serial number is 688688. In Chinese, 6 is pronounced same as 顺 (meaning everything goes according to one's own wish), 8 is same as 发 (in Cantonese, meaning getting rich). This means that Ant was getting preferential treatment that is way beyond normal expectation.<p>* Among many stakeholders of Ant, one can easily found many brokers of powerful hidden figures in CCP. For example, Zhao Wei's mother. Zhao Wei, who were barred from stock market because of previous misconduct [4,5], whose husband Huang Youlong was a driver of the corrupted CCP member Xu Zhongheng. Zhao Wei and Huang Youlong married shortly after Xu Zhongheng were prosecuted [6]. It was widely rumored that Zhao Wei was Xu's mistress, and Zhao Wei and Huang Youlong ensnared or inherent Xu Zhongheng's embezzled fortune.<p>[1] <a href="https://asia.nikkei.com/Opinion/Collapse-of-China-s-disgraced-P2P-sector-offers-important-lessons" rel="nofollow">https://asia.nikkei.com/Opinion/Collapse-of-China-s-disgrace...</a><p>[2] <a href="https://en.wikipedia.org/wiki/2015%E2%80%932016_Chinese_stock_market_turbulence" rel="nofollow">https://en.wikipedia.org/wiki/2015%E2%80%932016_Chinese_stoc...</a><p>[3] <a href="https://www.youtube.com/watch?v=DGzgpArH5AI" rel="nofollow">https://www.youtube.com/watch?v=DGzgpArH5AI</a><p>[4] <a href="https://www.rayradar.com/2020/10/31/ant-group-makes-a-feast-taishan-meeting-big-guy-zhao-wei-and-nursery-are-all-winners/" rel="nofollow">https://www.rayradar.com/2020/10/31/ant-group-makes-a-feast-...</a><p>[5] <a href="https://fr.reuters.com/article/us-china-zhaowei-trading-ban-idUSKBN1DA0T1" rel="nofollow">https://fr.reuters.com/article/us-china-zhaowei-trading-ban-...</a><p>[6] <a href="https://en.wikipedia.org/wiki/Xu_Zongheng" rel="nofollow">https://en.wikipedia.org/wiki/Xu_Zongheng</a><p>[7] <a href="https://sg.news.yahoo.com/zhao-weis-husband-denies-ties-031900119.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAA2YRVg-4j4R-iMRdxoUVOzvhSjiNFd0VanPvUjgg4b9ofh-r1JkOVqLOvqKNIHWcpY745DlmT6uGMJ6YVfMT-VEtNMWKAF4U5vdAcQsnCLt3ShZwKratcAgzT5EJhHqlalZeSz4Hrjv7frAfhHmDj1yyvBz5cverIHEz1jKFTL6" rel="nofollow">https://sg.news.yahoo.com/zhao-weis-husband-denies-ties-0319...</a>