Icarus And His Ant

Shares of Alibaba dove in Hong Kong Thursday, extending a slide that now sums to more than 25% since late October. 

Beijing, in keeping with implicit and explicit promises to crack down on tech companies deemed to have accumulated too much power, is investigating the company for monopolistic practices. At the same time, the PBoC wants to chat with Ant Group, presumably about China’s efforts to step up regulation of an increasingly unruly fintech space.

Apparently, Jack Ma was “advised” by Beijing to remain in China earlier this month. This situation seems to become more perilous for Ma by the week. His mistake — his Icarus moment, if you will — came on October 24 when, during an address at a summit in Shanghai, he decided to launch into a critique of regulatory standards which he blamed for stifling growth and innovation. Ma accused Chinese banks of acting like “pawnshops.”

Within two weeks, Ant’s planned dual-listing in Shanghai and Hong Kong was iced by Beijing. It would have been the largest IPO in history. Now, with China embarking on what certainly sounds like a sprawling, multi-agency effort to rein in big tech and simultaneously revamp the regulatory framework around the fintech industry, Ant’s IPO seems unlikely to see the light of day in 2021.

While it wouldn’t be accurate to attribute the entirety of the anti-monopoly push and attendant regulatory overhaul to Ma’s October speech, his remarks most assuredly accelerated the process.

“While Ma might not have realized the impact his words would have, people close to him had been baffled to learn in advance about the tone of the speech he planned to deliver,” Reuters said last month, citing a pair of sources close to Ma who “suggested the 56-year-old soften his remarks as some of China’s most senior financial regulators were due to attend.”

Ma refused, citing free speech, apparently forgetting what country he was in.

The rest, as they say, is history. Or, actually, history in the making, because this saga is ongoing.

“China is said to have separately set up a joint task force to oversee Ant, led by the Financial Stability and Development Committee, along with various departments of the central bank and other regulators,” Bloomberg reminded readers on Thursday, noting that “the group is in regular contact with Ant to collect data and other materials.”

For its part, Ant reiterated that it would “strictly” comply with, and conform to, any new regulations. The company said it did indeed receive an invitation from regulators on Thursday. No effort will be spared when it comes to compliance, Ant promised.

As for whether the anti-monopoly probe is a threat to Alibaba, the simple answer is “yes.” It is, after all, an “investigation” conducted by Beijing which is under no kind of obligation to be even-handed or otherwise impartial.

Raymond James said Thursday that the probe isn’t a surprise, but noted that it’s “difficult at this time to quantify the potential revenue impact.”


Alibaba issued a statement saying it will cooperate. As though they have a choice in the matter.

Nobody knows how aggressive Beijing plans to be going forward, but the move to ice Ant’s IPO and the fact that Ma has scarcely said a word since then, suggests that while promoting Chinese tech is a priority for the Party, there is no tolerance for perceived disobedience.

As one senior fellow and lecturer in the Business School at the National University of Singapore told Bloomberg Thursday, “there is nothing that [the] Chinese Communist Party doesn’t control.”

In the event a company, sector, or personality appears to be “gyrating out of its orbit,” that rogue element will swiftly find itself succumbing to the Party’s gravitational pull, he added.

Jack Ma, it would seem, has discovered that his wings were made of wax. And Xi is a star that burns very hot at high altitudes.

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10 thoughts on “Icarus And His Ant

  1. Yep. The Chinese Party is the 21st equivalent to the Nazi Party. I’m not exaggerating, I’m just putting asides WWII i.e. launching into war and carry out genocide(s) isn’t the only thing they’ve done. Only, the Chinese Party is smarter (so far).

    1. Given the situation in Xinjiang, I’m not going to forbid the Nazi comparisons here, but I would politely ask that commenters exercise common sense and ensure that any such comparative analysis accords the appropriate respect to the victims of Nazi Germany.

      In other words: There are pretty obviously human rights abuses going on in Xinjiang. But we can’t know what we don’t know. We do know what happened in the lead-up to and during World War II.

      So, let’s just respect that, and not get too carried away.

      1. I actually agree with you and that’s why I pointed out that the comparison applies to aspects other than the genocide(s).

        It’s obviously not surprising that the extermination of whole population would be the Nazis’ prime legacy and that these make them beyond the pale.

        But, as you pointed out, the stuff going on in Xinjiang is easily on par with the Nuremberg race laws. Furthermore, I was referencing the fact that Xi now explicitly defined the Chinese Communist Party ideology as being engaged in a death struggle with the West/liberal democratic ideals. This is obviously true of the Nazi ideology (and Stalinism too but the collapse of the Soviet Union robs the comparison of some of its strengths). It’s worth remembering that Nazis is a contraction of National Socialism. So collectivist behaviours in service of the nation, as opposed to personal rights and freedoms.

        Xi wants a New (Chinese/Soviet/ubermensch) Man and Ma is basically too corrupted by western ideals and capitalism and thus must be destroyed.

        This is what I meant, expanded a bit. I think my comparison is fair and does not make light of Nazis’ victims. I hope I would never do that, wittingly certainly but even by accident.

        1. Yeah, totally understand. I was just saying that nobody really knows the extent of what’s going on in Xinjiang. The most in-depth reporting I’ve read is harrowing, by any standard, that’s for sure. But I would assume (hope) that if there were literal, mass exterminations going on, that somebody’s intelligence apparatus would know. As I understand it, if a major power were aware of such a thing, they would be obligated to intervene, militarily if necessary. And at any risk and at almost any cost. I could be interpreting the legalese around that wrong, but that’s the way I understand it.

          1. I very much doubt that we would. We didn’t when Saddam was very clearly and very openly gassing the Kurds living in Iraq.

            The risks would have been far more reduced than confronting a nuclear power like China. If they decide to go full extermination, we will have no choice but to let them do it. Like we did when Russia carried out campaigns against the Chechens.

            We simply cannot counteract a nuclear power. Indeed, no one did zilch when the US invaded Iraq even if most of us (outside the USA) knew full well the reasons were fake.

            But what were we meant to do? Attack the US up to and including with nukes? The solution would have been worse than the problem…

        2. The state-sponsored cultural and ethnic repression in Xinjiang is akin to the Jim Crow laws. Your comment presents the false equivalence between claiming a race is superior while others are subhuman (Nazis) and the subjugation/division of population based on race (Jim Crow politics).

          When have you heard the Chinese state talk about or act on the superiority of a race?

          1. One, I suspect that’s a difference without a distinction. If you’re a Muslim in Xinjiang or a Tibetan and being sterilized, does it really matter that Xi doesn’t literally believe you’re subhuman?

            Furthermore :

            https://en.wikipedia.org/wiki/Sinocentrism (notably, “At the center of the system stood China, ruled by a dynasty that had gained the Mandate of Heaven. This “Celestial Dynasty” (…) regarded itself as the most prominent civilization in the world; the Emperor of China was considered the only legitimate emperor of the entire world (all lands under heaven)).

            https://en.wikipedia.org/wiki/Han_nationalism (notably : However Xi Jinping’s concept of a Chinese Dream is believed to have distinctly Han dimensions and to support Han chauvinism even if unwittingly. The fusion of traditional Han chauvinism with KMT style Chinese nationalism as practiced by the modern Chinese state has been described as Han-centrism)

            That is to say that Nazis were extreme even by fascistic standards. While Xi and the CCP may not have a full blown race theory, they’re very much nationalists and “socialists” (i.e. primacy of the in-group over individualism).

            To repeat myself, the Nazis are more than just a bunch of racists who committed horrendous genocides. They had a full fledged ideology beyond race.

            I could have used fascists rather than Nazis in my comparison but the Han centrism and the “China’s destiny is to rule the world” strike me as a bit more ambitious than just, say, Mussolini desire to dominate the African mediterranean coast or Portugal’s desire to keep Angola and Cape Verde…

            But finally : https://foreignpolicy.com/2019/11/21/xi-jinping-china-communist-party-francois-bougon/

            “a sign that [Xi] finds the Marxist-Leninist base solid enough to graft onto it the long history of ‘wonderful Chinese civilisation.’” Xi’s allusions signal to party members that one can be a proud Marxist and proud of China’s traditional culture at the same time. So-called “Xi Jinping Thought” promises to weave the strands of China’s history and heritage into one grand whole.
            Xi generally divides this history into four historical acts. The first is China’s imperial and pre-imperial past, the so-called “5,000 years of history” that culminate in the splendor of the Qing Dynasty (1644-1911) at its height. This, in Chinese terms, is their country’s “ancient history.”

            The remaining years are divided into three parts: “the century of humiliation,” in which China was ravished by imperial powers; “the New China era,” Xi’s favored term for China under Mao Zedong; and “the era of socialism with Chinese characteristics,” which began under the guiding hand of Deng Xiaoping and continues on to the present. Xi quite consciously draws inspiration from each of these eras when framing his policies. Most references to China’s pre-modern past are superficial, more important for their aesthetic effect than ideological power. Far more serious is Xi’s quest to reclaim the legacy of New China. Harmonizing the institutions of 21st-century China with the party’s Maoist ideological heritage is central to Xi’s political project. Bougon argues that it is the defining feature of Xi’s inner sense of purpose.

            Xi’s driving need to rehabilitate Mao is partly born out of practical necessity. For Xi, venerating the old helmsman is the difference between death and survival. “If at the time of reform Comrade Mao had been completely repudiated, would our party still be standing? Would our country’s system of socialism still be standing?” he asked the Chinese Communist Party Central Committee several days after being elevated to the position of general secretary. Answering his own question, he quoted the words of Deng: “These things cannot be cut away from the entire history of our party and our country. To grasp this is to grasp everything. This is not just an intellectual issue–it is a political issue.”

  2. Will 2020 go down as the begiining of the end of Internet 2.0’s Wild West phase? Given recent events in China, the EU, and the U.S., it’s beginning to look that way. Walls are going up, not coming down; invest accordingly.

  3. H-Man, this appears to be more akin to who is the dog versus the tail. It appears that Ma believed he could move up the hind quarter but has been reminded, quite forcefully, that he is at the tip of the tail. Also a warning to anyone else who may harbor similar thoughts.

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