The ruling Chinese Communist Party (CCP) has taken further steps to contain e-commerce giant Alibaba, with the launch of an antitrust investigation into the technology company headed by tycoon Jack Ma.
“Based on the complaints received by the State Administration for Market Regulation in the past few days, the administration will be investigating Alibaba … for suspicions of monopolistic activities,” said the administration in a statement on its website.
The statement was allegedly linked to a policy that forces sellers using Alibaba.com to commit to using that platform exclusively, preventing them from using rival platforms JD.com and Pinduoduo.
Alibaba issued a statement saying it would actively cooperate with the regulator and that the company’s operations would continue normally.
The news generated an 8% drop in the value of the company’s shares on the Hong Kong Stock Exchange in Thursday.
The announcement came amid ongoing scrutiny by financial market regulators at Ma’s Ant Group, which manages the Alipay payment system.
“Today, The Ant Group received a notice of the regulators’ meeting, “the company said in a statement on Thursday.
There is evidence that the decision to go after Ant and Alibaba comes from the top echelons of the CCP’s leadership.
‘Anti-monopoly work’
An article in the CCP’s official spokesman, the People’s Daily, praised “anti-monopoly work” as leading to “better development”, based on recent calls from the CCP’s Politburo.
The Politburo was of the opinion that the government should “strengthen anti-monopoly work and prevent the disorderly expansion of capital,” the newspaper said.
Song Qing, a member of the Internet finance industry, said the investigation is part of the CCP’s plans to nationalize Ant Group and Alibaba.
“There will definitely be a result, now that they have started the investigation,” Song told the RFA. “This is probably coming from the highest levels.”
“Just a few weeks ago, they established plans to nationalize Ant Group and Alibaba; the timing was deliberate,” said Song. “All of these plans came from the central leadership.”
“These nationalizations are definitely taking place, and [the antitrust investigation] will likely speed up that process, “said Song.” It’s also, I think, about making an example of [Ant and Alibaba]. “
Central government investigators had already set up camp at Alibaba headquarters in late November, according to industry sources.
The company will also be called to follow-up meetings with the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the State Exchange Administration, after regulators hit the brakes on Alibaba’s listing in New York in early November.
Investigative teams are also installed in the offices of social media giant Tencent and e-commerce company Meituan.
Healthy development
A Nanjing economist surnamed Qian said that China’s technology companies actually promote health and economic development.
“Tax rates for traditional companies are very high and online businesses have lower transaction costs and are more convenient [for the customer]”Said Qian.” The Internet industry … is actually a healthy thing for the market economy. “
Lin Jiaqi, director of Hong Kong Honghui Asset Management, said he hoped Alibaba’s investigation would help the CCP shape future policies for the country’s technology giants.
“I think the central government will continue with more investigations by other companies,” said Lin. “We will see more and more antitrust investigations and sanctions for [alleged] monopolies will gradually increase. “
The state media has endeavored to paint the government’s goal of Ma’s technological empire as a campaign to subject the country’s super-rich to public scrutiny and regulation.
“They target this big company … because they want people to hate the super-rich,” commentator Guan Xingwang told RFA.
“They are using this propaganda to justify expanding state control of the economy and diminishing the power of the private sector,” he said. “This is another step towards nationalization.”
The CCP’s secretary general, Xi Jinping, revealed plans in late October to move China to a state-controlled “circular” economy based on domestic demand, and away from the export-based model that has fueled rapid growth since 1979, when the late supreme leader Deng Xiaoping ushered in four decades of market-based economic policy.
Analysts said there was a widespread expectation that Xi would change the current ownership system.
Reported by Qiao Long to the FRG Mandarin service. Translated and edited by Luisetta Mudie.