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What’s next after reaping Alibaba|Poon Siu-to

蘋果日報 2020/12/30 10:18


While it takes just a breeze for Xi Jinping to wreck Alibaba, a well-known Chinese internet magnate, it takes even less than a split second for him to decide the destinies of other heavyweight private enterprises.
Alibaba is accused of monopolizing the market and investigated by the State Administration for Market Regulation. Yuan Jiajun, Deputy Communist Party Secretary of Zhejiang province, publicly proclaimed that preventing trusts and improper competition is a disposition decided by the party central committee led by Xi Jinping. Zhejiang is Xi’s political base camp where he rose to power and position. Yuan’s team, Xi’s trusted henchmen, making it clear that controlling monopolies is Xi’s disposition plainly suggests Alibaba has been sentenced to a full penalty. No wonder Alibaba’s share price has taken a nosedive.
In fact, state-owned People’s Daily has published a number of commentaries in recent days criticizing Alibaba for cornering the market, pointing out that monopolization holds back and distorts resources allocation, as well as causing damages to markets and consumers’ interests and strangling advancement of technology. They also professed that preventing monopolies is international practice and has been high on the agenda concerning the general development of China. Other state-owned media purported that the best solution to the Alibaba crisis is to have it nationalized. In short, this Chinese leading private technological enterprise with a reputation that is second to none is highly likely bound to be falling apart overnight.
The question is that while the inference from economic theories about the disastrous effect of monopolization has been loud and clear for decades, monopolization of various industries in China has been in existence for a long time. Among power supply, coal mining, provision of petroleum, railways, transportation, tobacco and telecommunications, which one is not monopolized by state enterprise? Has there been any action taken against them? Have state-owned media issued a rallying cry for opposing the monopolization by state enterprises in an attempt to protect consumers’ interests? Apparently, this is a purge of Ma Yun and Alibaba, even other private-enterprise moguls, in the name of controlling trusts.
As the saying goes, three feet of ice does not form in a single day, the crisis of Ma Yun’s business empire is traceable. It is said that the speech given by Ma Yun criticizing China’s financial system and watchdog bodies before the Ant Group being listed got the people in power riled, so Ma is penalized. Admittedly, the remarks from Ma, “(the issue in China) is not about the risk of the financial system, but the risk of a lack of a financial ecosystem” and “good innovations welcome regulation, but not archaic regulation”, are repugnant. It is not a hype even to say he has stirred up a real hornet’s nest. But that is only the cover story. There are complicated entanglements and political reasons hidden behind the scenes.
A few conjectures about the reasons behind Alibaba being “put to death” have been made thus far. First, reaping. In recent years, while the fiscal income of the government has been shrinking sharply, a host of district governments have been debt-ridden and finding it hard to make ends meet. Meanwhile, it has been rumored that state enterprises fail to repay debts. So, to weather the storm, the government has to reap the rewards of quality private enterprises or listed state enterprises. Take the following as examples. State enterprise Moutai Group had to present 4% of its shares, which is worth HKD110 billion, as a gift to Guizhou Provincial People’s Government (accounting for one-sixth of the government’s fiscal income). Laobaigan Liquor Co., Ltd. submitted 10% of its shares to the Finance Department of Hebei Province. What’s more, the pension funds gap in China will reach 10 trillion yuan in the 5 to 10 years ahead. Former governor of the People’s bank of China Dai Xianglong suggested part of the charge for land users and properties of corrupt officials be put in social security fund. It can be seen that different fiscal systems are in straitened circumstances.
To government functionaries, looking at the huge amount of income enjoyed by Alibaba and other internet moguls is like seeing a tantalizing opportunity yet being unable to capitalize on it. Beijing authorities have stepped up their efforts to tackle private enterprises in recent months. After Sun Dawu, the former richest billionaire of Hebei, and his family were arrested, Yang Zongyi, the former richest billionaire of Nanjing was also apprehended for allegedly soaking up public deposits. The authorities probably cast their greedy eyes on their assets. Will the government demand money from unprofitable enterprises or look into whether they monopolize the market?

Xi needs a higher political and economic safety factor

Apart from the authorities coveting after the golden eggs laid by quality private enterprises, politics play an important role. Alibaba and other internet moguls have been growing astonishingly in recent years, even aggrandizing themselves during the coronavirus pandemic. Xi Jinping has been curtailing and controlling them by various means, which includes requiring these enterprises to establish a party branch for the communist party members to sit in at their boards of directors, and even forcing Ma Yun and the like to take early retirement or submit part of their shares. Though the measures were not effective, it suggests that Xi feels worried about them. The big bosses behind these enterprises that do not pertain to Xi’s own clique are even his rivals (Jiang Zemin and other senior statesmen) or overseas consortia. The more resources they take a grip on, the more Xi feel insecure. When the 20th National Congress of the Communist Party of China in 2022, a grand ceremony for his perennial ruling indeed, is closing in, Xi needs a much higher political and economic safety factor. That is the principal reason why they are purged.
Hence, following Alibaba having encountered the mishap, other internet moguls and private enterprises are destined for a calamity. Such a trick to take over private properties as communal assets has been staged time and again since the Chinese Communist Party founded a government, which is where the dread of this polity lies. From forced donation in the name of “resisting US, helping North Korea” in the 50s to establishing the socialist joint state-private ownership to confiscation of all private properties in the name of revolution to the state in need of financial support or in apprehension for the threat posed by the thriving private enterprises nowadays, numerous private enterprises have been and will be doomed to a purge.
As to the plutocrats under “one country, two systems” in Hong Kong, their good days are almost over. If they hold the view that they can go all out to truckle to and curry favor with the regime in exchange for security, they are wrong. Take Alibaba and other moguls. They also went all out to pander to the people in power, as well as drawing on personal connections to keep them satisfied; Ma Yun even suggested part of Ant Group’s shares be submitted to the state. The results? Don’t underestimate their ambition to nationalize private properties, and don’t give a wrong assessment of their resolve to purge private enterprises triggered by a sense of insecurity!
(Poon Siu-to, veteran journalist)
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