Bloomberg Businessweek June 28, 2021 pp27 |Finance|”China Turns on Its Fintech Darlings” “Jack Ma’s Ant has lost at least $70 billion in value, and rivals from Tencent to JD.com are under pressure, too” THE BOTTOM LINE “China’s biggest technology companies used financial products to expand their reach and take on state banks, but policy makers want more control.”
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Summary provided by 2244
American and European governments have long pondered what to do with “tech giants that have amassed so much market power” but China has acted out in a resounding way calling for “recertification” the term for a “state-ordered business overhaul.” Best example to date is Jack Ma who has “all but dropped from public view” and his firm Ant had it’s planned IPO pulled and since has dropped $70 billion in market capitalization. “A team from the nation’s top financial regulators now demands regular updates from Ant Chief Executive Officer Eric Ling and his staff on the progress” toward recertification.
In essence there has been a collision between China’s Big Tech firms spouting with “internet capitalism-and the wealth and influences it brings” with the “aims of the Chinese Communist Party” including have the People’s Bank of China in control. “Authorities have...issued new rules ranging from consumer lending to leverage to monopolies in online payments.”
The government and “state media have tapped into strands of popular resentment toward China’s hyperwealthy moguls, criticizing the companies for miring people in debt.” This comes as big banks “collectively invested a record $31 billion in fintech.” Even regulators acknowledge the innovation brought by these banks by increasing “efficiency and access” for “ordinary people...hungry for loans" Businessman “Li Lin, who owns a factory in Sichuan province notes “‘It’s been extremely hard for small companies to get financing from state banks” causing them to use “small online lenders that fly under regulator’s radar and charge usurious rates.”