China's banking regulator has vowed to crack down heavily on the "disorderly expansion of capital" and "chaotic innovation" among tech companies providing financial (fintech) services including Ant Group, as the company's founder, tech tycoon Jack Ma, remains out of the public eye amid mounting speculation that he has been detained by the authorities.
"We must ... vigorously break up monopolies, prevent the disorderly expansion of capital, and promptly and strictly punish violations of the laws and regulations," the China Banking and Insurance Regulatory Commission was quoted as saying by state-run media.
It said there would be severe crackdowns on "pseudo-innovation" and "chaotic innovation," and zero tolerance" for online service providers breaking the law.
"There may be a limited transition period, but the general policy direction will not change," the Economic Information Daily, a newspaper under the aegis of the state news agency Xinhua, quoted a department head at the Commission as saying in a Jan. 4 report.
The ruling Chinese Communist Party (CCP) recently took steps to curb e-commerce giant Alibaba with the launch of an antitrust investigation into the tech company also headed by Jack Ma.
The wording of the report seems to have come down from the highest levels, suggesting that the regulator is warning the industry of a major shake-up after regulators pulled the plug on Ma's Ant Group New York IPO at the eleventh hour in November 2020, hauling Ma in for questioning.
A December article in the CCP's official mouthpiece, the People's Daily, reported that the CCP's Politburo was of the opinion that the government should "strengthen anti-monopoly work and prevent the disorderly expansion of capital."
Plans to nationalize
Sources have told RFA that the ongoing investigations into Ma and his companies is part of CCP plans to nationalize both Ant Group and Alibaba.
According to the banking regulator, the rapid development of China's financial technology industry is threatening financial stability and online security, and there are issues centering on both individuals and the sector as a whole.
"Recently, the four central financial management ministries and commissions once again interviewed Ant Group," the Economic Information Daily quoted the department head as saying.
"They emphasized that the outstanding issues needing rectification are both individual and universal," the official said, calling on online service providers to start the process of "rectification" themselves, and await further inspection.
"Financial innovation must be carried out under prudent supervision," the official said. "We will effectively maintain financial stability and security."
The article, with its reference to Ma's Ant Group, comes amid mounting speculation over Ma's whereabouts and status in the eyes of the CCP.
The Financial Times reported on Friday that the CPP propaganda department had directed media outlets to stick to government-approved statements on the probe into Alibaba.
"If any company announcements oppose the official stance, do not publish, do not re-post, do not quote foreign media," the paper quoted the directive as saying, citing two people who had seen it.
Disappeared
Ma hasn't been seen in public since the suspension of the Ant Group IPO, and political analysts are beginning to draw parallels with the case of kidnapped billionaire Xiao Jianhua amid allegations of unauthorized lending, as CCP General Secretary Xi Jinping moves to strengthen the domestic economy.
Xiao is believed to have been abducted by mainland Chinese state security police from his apartment in Hong Kong's Four Seasons Hotel in January 2017.
Economist Law Ka-chung said Beijing is likely moving against Ant and Alibaba because they have become too powerful.
"The Chinese Communist Party may feel that the platforms owned by Ant and Ali control the lion's share of data nationwide, including personal details of nearly everybody, as well as a huge amount of money," Law told RFA.
"They have access to huge sources of funding, and are powerful enough to negotiate with the regime," he said.
"Their handling of Jack Ma isn't just about an antitrust investigation; it's also about the concern that he could be a threat to CCP rule," he said. "It's not just about economics; he may be seen as a political threat."
"Politics trumps everything, as far as the CCP is concerned; it has always been their top consideration," Law said.
Feng Chongyi, an associate professor at the University of Technology Sydney (UTS), drew parallels with banking tycoon Xiao Jianhua.
"This is similar to [what happened to] Xiao Jianhua; [like Xiao, Ma] may also be under house arrest," Feng said.
"All we can be sure of on the outside is that he is under a travel ban ... but many people think he is under restrictive measures," he said. "If that's the case, then they will be investigating all of Alibaba's finances and operations, shareholders, and so on."
Investigations under way
Industry analysts have told RFA they believe that the investigations will result in the nationalization of both Ant Group and Alibaba.
Central government investigators had already set up camp in Alibaba headquarters by the end of 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 Administration of Foreign Exchange after regulators slammed the brakes on Alibaba's New York listing in early November.
Investigative teams are also in place at the offices of social media giant Tencent and e-commerce company Meituan.
Analysts say the Alibaba investigation will help the CCP to form future policy towards the country's tech giants.
State media have been keen to paint the government's targeting of Ma's tech empire as a campaign to subject the nation's super-rich to public scrutiny and regulation.
CCP general secretary Xi Jinping unveiled plans at the end of 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 late supreme leader Deng Xiaoping ushered in four decades of market-based economic policy.
Analysts have said there is a widespread expectation that Xi will move to change the current system of property ownership.
Reported by Gao Feng for RFA's Mandarin and Cantonese Services. Translated and edited by Luisetta Mudie.