As China Persecutes Jack Ma, Chinese Tech Firms Face U.S. Ban: Report

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Now Jack Ma has become a case study for the company’s biggest skeptics.

Chinese tech companies have done a good job convincing global investors to operate independently of the Communist Party. Now Jack Ma has become a case study for the company’s biggest skeptics.

Alibaba Group Holding Ltd. to Tencent Holdings Ltd. spent billions on acquisitions overseas while developing apps and technologies that challenged Western competitors with little or no government intervention. But Beijing’s persecution of Ma and his Ant Group Co., after criticizing regulators, arguably plays right into the hands of China’s biggest critics in Washington, who have long claimed that no Chinese tech giant or entrepreneur is out of Xi Jinping’s reach .

The US authorities are currently debating whether investments in Alibaba and Tencent should be banned in the view of those familiar with the matter. That would be a dramatic blow to two of the companies whose stocks are most commonly held by global investors. Back on Tuesday, President Donald Trump signed an ordinance banning transactions with eight Chinese software applications, including Ant’s Alipay and Tencent’s WeChat Pay, citing concerns that Beijing will have access to the data collected by the platforms. “I stand by President Trump’s commitment to protecting the privacy and security of Americans from threats from the Chinese Communist Party,” said Commerce Secretary Wilbur Ross in a statement to the Order.

Beijing’s moves could put pressure on Joe Biden’s new administration to impose further measures that will adversely affect China, although it is not clear how much of Trump’s aggressive policies the president-elect will continue.

The party’s influence on business has become even more evident over the past 12 months as Xi urges cementing power ahead of next year’s big party convention, when he is expected to extend his rule for at least another five years. Covid-19 has only served to strengthen its influence and fueled a war-like campaign to get the economy back on track and block out perceived threats to national security.

“You need to know very well who ultimately controls the regulations, who controls the licensing – who is responsible,” said Mark Natkin, general manager of Marbridge Consulting in Beijing. “And if you forget and start being overly critical or taking on too big a role that is usually part of the party, then you get hacked down a notch or two.”

Beijing has been struggling to fundamentally revamp Ma’s trillion-dollar Internet empire since demolishing Ant’s $ 35 billion public offering in November. Authorities then forced his online financial titan to limit loans and devise a plan to spin off his most lucrative businesses. The government also opened an investigation into suspected anti-competitive practices in Alibaba. The billionaire hasn’t been seen publicly since November, and his absence from the most recent tapping of an African television show he made spurred speculation about his whereabouts.

“There is a lot of power in the Chinese government’s economic and financial management infrastructure, and if Ant were to undermine that power, important people would see it as a step too far,” said Graham Webster, editor of the DigiChina project at Stanford Cyber ​​Policy Center. “However, the Chinese government also recognizes these leading companies as drivers of technological independence. The party would have to recognize significant threats in order to demolish them.”

The action against Ma sends the latest signal that Beijing feels encouraged to risk the international repercussions of measures taken to address domestic challenges. Xi previously resisted threats from US sanctions to impose comprehensive national security laws on the former British colony of Hong Kong. Crushing Ant’s IPO risked alienating a host of powerful global financiers from Singapore’s sovereign wealth fund to Carlyle.

The U.S. has also raised concerns about the Chinese government’s influence over private industry to justify its efforts to get ByteDance Ltd. force to sell the American portion of their social network TikTok; and the global campaign to persuade allies to renounce devices from supporters of Huawei Technologies Co. Such measures are often referred to as Chinese guidelines such as a 2017 law according to which Corporations are required to “assist, assist and work with” intelligence agencies.

Like Huawei, Ant has reaffirmed its independence from the Chinese government, declaring in a 2017 motion to the United States Securities and Exchange Commission that it is a “private company” and that a handful of Chinese state-owned or affiliated funds own a non-controlling minority do not participate in corporate governance. “

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The party has long reached out to private companies, including foreign ones operating in China. One way of doing this is through the presence of party committees in companies, including technology companies, made up of employees.

It also sends officials to companies to monitor certain activities. Many technology leaders are also party members, including Ma, Lenovo founder Liu Chuanzhi, and Ren Zhengfei of Huawei. Tencent’s Pony Ma and Lei Jun from Xiaomi Corp. are both delegates of the National People’s Congress.

The party also stepped in several times to punish executives for mismanagement, including Wu Xiaohui of the Anbang Insurance Group.

However, recent efforts to exert government influence over businesses and intervene in the business landscape have reached new levels. That is fuel for the China hawks in Washington, who argue that the party has too much influence over Chinese companies.

Xi needs executives on his side to achieve strategic goals such as the Dual Circulation business plan, which focuses on domestic consumption, develops secure supply chains, and reduces reliance on foreign technology. While the world‘s second largest economy was the first to recover from Covid-19, its recovery is showing signs of a high point, even as global growth remains sluggish and relations with the United States remain strained.

In a rare direct plea for the corporate sector in July, Xi urged executives, including those in the tech industry, to be more patriotic and support the post-pandemic economic recovery. “Great entrepreneurs must have a strong sense of mission and responsibility to the nation and align the development of their business with the prosperity of the nation and the happiness of the people,” he said.

Weeks later, the party revealed plans to tighten control over the private sector by expanding its networking activities on the United Front further to the business community. Politicians will “strengthen ideological leadership” and “create a core group of private sector executives who can be relied on in critical times,” according to the guidelines published at the time.

“Under President Xi, the CCP tightened its control over technology companies and doubled its techno-nationalist initiatives,” researcher Alex Capri wrote in a recent report for the Hinrich Foundation. “In addition to placing party officials in prominent corporations, it continues to neutralize high-profile corporate executives who are perceived to have operated independently of party policy or become too influential.”

(Except for the headline, this story was not edited by GossipMantri staff and published from a syndicated feed.)

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