China’s ubiquitous online payment platforms Alipay and WeChat Pay had built their parallel credit scoring system, which ran counter to Beijing’s to set up a centralised credit scoring system. Seemingly, China took the warning more seriously than its peers when the World Economic Forum (WEF) warned that the disruption caused by Big Tech poses a threat to the traditional banking system. This meant banks and brokerages, which are the traditional route for retail investors to buy into funds, could not have a share of the pie. Reuters reported that the Alibaba-owned payment platform Alipay was the only third-party channel through which retail investors could buy into five Chinese mutual funds investing in the IPO, which was a conflict of interest. Moreover, CSRC guidelines stipulate that mutual fund distributors should not directly or indirectly engage in any other business that conflicts with or has nothing to do with the management of private equity funds. In November, China’s monetary regulators released draft rules on micro-lending, mandating capital requirements for technology firms offering loans. The core problem was that the so-called freewheeling fintech giant was operating as a bank, albeit unregulated. Financial News, a newspaper affiliated with the People’s Bank of China, published an elaborate commentary criticising Ant’s business model. Reducing financial risk was made a top economic priority during the 19th National Congress of the CPC, held in 2017. Even in the past, Jack Ma had been vocal in his criticisms of the banking sector. However, this was not the primary reason. News Asia reported that the China Securities Regulatory Commission (CSRC) had initially approved Ant’s IPO application, but it ostensibly came under scrutiny after its founder, Jack Ma, overtly criticised the global banking standards and the Chinese regulatory system on the eve of the dual listing of his company.
But Ant set the bells ringing when it attracted $3 trillion of retail investor bids, equivalent to the gross domestic product of the United Kingdom. Fintech business was already under the radar of central authorities when the Ant Group filed its initial public offering (IPO) in October 2020. However, most of them speculated that it is a part of Beijing’s plan to assimilate Big Tech into the CPC-led “Chinese Dream”, which includes financial stability, ideological stance, geopolitics, and social challenges. The onset of the major techlash has left China watchers guessing as to what is the overarching reason for the consecutive measures taken by the Communist Party of China (CPC).
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