Xi's Dream Undoes Deng's

It is built around propping up Mao rather than Jack Ma. It puts China’s prosperity at high risk

- Gautam Bambawale

The National Day of the People’s Republic of China celebrated today is an apt occasion to ponder as well as analyse some important, recent domestic developments in our northern neighbour.

A major tremor in China’s financial sector occurred in November 2020, when Ant Financial, a Chinese fintech firm promoted by Jack Ma, was forced to suspend an initial public offering which was being launched simultaneously on the Shanghai and Hong Kong Stock exchanges. The IPO was valued at $37 billion and would have broken several records due to its sheer size. The investor community from across the world had expressed great interest in the IPO which would have been oversubscribed several times.

A few days prior to the launch of the IPO, Chinese financial sector regulators announced new rules and regulations for the fintech sector. Ant Financial was not in compliance with the new rules, resulting in the withdrawal of its proposed IPO. Even if Ant were to commence making changes now to abide by the newly introduced regulations it will take them several months before they are in a position to launch their IPO and more significantly its valuation will have been decimated.

As in other countries, even more so in China, the political undertones are important. In end October 2020, at an international conference at Shanghai, founder Jack Ma made what can only be described as abrasive comments about China’s financial regulators. The speed at which events moved thereafter ensured that Ant’s IPO scheduled for November 5 was scuppered.