• China’s president Xi Jinping is in unassailable control of the country and big tech companies have been tamed
• They’ll now toe the party line and make lots of money
• Meanwhile the government will “promote healthy development of internet platforms"
• Fintech is back in from the cold and expected to be key to China’s economic growth
• But former shining star Jack Ma has not been offered the olive branch

The powers that be in China, and they are a shadowy bunch, are letting it be known through various channels that, following more than two years of hammering down on the perceived iniquities and infidelities of the big technology companies of the People’s Republic, they are declaring the estrangement over and are now prepared to pucker-up and make nice – except with exiled Jack Ma, the founder of Alibaba, who gets another metaphorical kick in the ribs to see him into the Year of the Rabbit. 

Apparently, realisation has dawned that the tech crackdown has lasted too long and is damaging China’s macro-economy, allowing the US and Indian tech companies to continue to make seven-league leaps in technological innovation while the PRC’s stagnated. 

The state-run national mouthpiece news agency Xinhua, which never writes anything without official permission, has quoted one Guo Shuqing, a China Communist Party (CCP) apparatchik, banker and financial regulator, as saying all is now sweetness and light again between the CCP and big tech, in general, and the 14 influential companies that have been regulated into quiescent compliance in particular. 

The word now is that they have learned their lessons and the government will henceforth “promote healthy development of internet platforms”. Guo, who is the chairman of the China Banking and Insurance Regulatory Commission and the former governor and deputy party secretary of Shandong Province, added: “We’ll encourage them to come out strong in leading economic growth, creating more jobs, and competing globally.” 

By strange coincidence, Guo’s emollient benevolence was showcased last Saturday, the same day that Jack Ma, who is currently holed-up in apparent self-exile in Thailand, “relinquished control” of the Ant Group (of which he is the founder) following a restructuring of the giant fintech business that was “agreed to” by shareholders, CNN has reported.

Ant Group is a fintech company affiliated with the Alibaba conglomerate. The group owns the world's largest mobile payment platform Alipay, which serves more than 1.3 billion users and 80 million merchants. 

With its rehabilitation, China’s tech sector has now come full circle. In 2020, with private enterprise perceived to have grown far too big for its boots, fintech was the first sector to be targeted, reined-in and fenced around with harsh new regulations as the Chinese government took fright.

The politburo’s intervention was so sudden that the much-anticipated and long-planned initial public offering (IPO) of the Ant Group, which was expected to raise US$37bn, was pulled at the last minute. Thereafter, the regulators moved onto other private enterprise big tech companies, including the likes of Baidu and Tencent. Well over $1tn has been wiped from the value of China’s big tech companies since the government stamped down on them.

A new focus on boosting economic growth

Last October at the 20th National Congress of the Chinese Communist Party in Beijing, President Xi secured an unprecedented third five-year term as general secretary of the party. Among all the moves and machinations designed to consolidate and reinforce his total dominance of the country, there was some mention of improving overall economic growth starting this year and somewhat less-constrained big tech and private enterprise are seen as key to that aim.

In his interview with Xinhua, Guo Shuqing said he believes that the Chinese economy will return to normal in the near future. “The key to rapid economic recovery and high-quality development is to convert current total income to consumption and investment as much as possible,” he said.

However, in the short term, much will depend on the ramifications of the sudden U-turn of the national Covid-19 isolation policy. Since it was lifted, the pandemic has torn through China like wildfire and the spread of the virus will only accelerate further as millions of people go back to their hometowns to celebrate the long Chinese New Year holiday. It will be a big surprise if the Chinese economy shows much evidence of growth in Q1 this year and raging Covid could also impact Q2, leaving the country with a lot to do to catch up in the second half of 2023.

In an effort to ameliorate matters, Guo said private businesses from large to small will get financial support to grow. What’s more, there’ll be “support” for new IPOs and new bonds will be issued. The government will also have to act to get the housing market going again: It has been in recession since 2020 and many building projects remain empty or unfinished.

As for Jack Ma, the one-time schoolteacher who co-founded AliBaba and founded the Ant Group, he fell foul of the party after having criticised its economic and banking policies and then disappeared for three months only to return as a much diminished and quieter figure – see China neuters Jack Ma’s Ant Group.

Chastened maybe, but he still remains persona non grata as far as the politburo is concerned and all he has left now of his once immense wealth and influence is just 6.2% of the Ant Group.

Before the ‘restructuring’, he had 50% of the company. In 2020, The Wall Street Journal reported that an angry and vindictive Xi Jinping had personally ordered the abandonment of the group’s IPO – see The regulators’ revenge: Why Jack Ma lost his Ant Group IPO. 

Ma has learned the hard way that politics is a ruthless game and Xi Jinping can be ruthlessness personified. Ma doesn’t want to be ‘disappeared’ again: A second time could well turn out to be permanent.