Alibaba founder Jack Ma in a file photo. Image: Facebook

Ant Group, the digital payments company founded in 2014 as part of Jack Ma’s giant e-commerce firm Alibaba, was heading for a rich payday with an IPO on the Shanghai market and a concurrent listing in Hong Kong that would have raised about US$37 billion. 

Not a bad day’s work considering everything that’s been going on lately, from Covid-19 to the US-China trade war and generally frosty relations between Beijing and Washington accentuated by People’s Liberation Army saber-rattling towards Taiwan.

However, the IPO was abruptly canceled on November 2 after Chinese government officials invited Ma in for tea to discuss “views regarding the health and stability of the financial sector.” That was the excuse, anyway.

You see, Ma’s problems aren’t with the financial regulators but rather with the Chinese Communist Party’s top leadership. There probably isn’t a single Chinese financial firm (or any other kind) that regulators could not call onto the carpet if they felt like it. So the given reason for the Ant IPO’s suspension is probably not the reason.

When Ma criticized the Chinese banking system and regulations at a recent event in Shanghai he was implicitly criticizing China’s rulers. That’s a bad idea as any number of too rich and too well-connected tycoons, generals and intelligence bosses have discovered the hard way.

You’d think people would know by now. Even if you are Jack Ma, you will only be as successful in the Chinese market as the Chinese Communist Party (CCP) allows you to be. That’s always been the case for foreigners, although few will admit it. 

And it also applies to Chinese – even to a self-made (with a little help from the Party) billionaire like Ma.

Ma was already on thin ice, so why did he say China’s banks are like “pawn shops”? Hubris comes to mind, as the ancient Greeks well knew. Sometimes you just can’t help yourself, especially if you’re worth billions.

Anything is possible. But consider the political value to Zhongnanhai of a successful $37 billion listing for Ant Group.

Think about it: America has been in Covid-19 induced depression (economic and mental) and chaos for months, and Americans are at each other’s throats. The November 3 national election has produced even more chaos, which will continue for a long while. And some Americans even reckon their nation’s entire democracy and society needs to be overhauled.

So there is plenty of PRC propaganda value to be had from a successful Ant IPO. In short, while American shopkeepers in Washington and New York City are boarding up their storefront windows and guns and ammo sales are skyrocketing, America’s leading financial firms are pouring tens of billions of dollars into a Chinese company.

What more evidence do you need that the CCP-led People’s Republic of China is superior?

So to have the plug pulled on the Ant IPO, one reasonably presumes Ma made somebody really important really mad. Speculatively, that just might be Xi Jinping.

Ma’s experiences and those of a number of now incarcerated Chinese high-fliers ought to be instructive. But how much chance is there that America’s financial masters of the universe will take note that in China it’s Xi’s word that is the law, not the written kind?

Not much. It’s not that they don’t know; it’s more that they don’t care. They’ve already made bundles on China and stashed them somewhere safe overseas. And it’s often other people’s money they are pushing into the PRC anyway. 

So an investor looking to put some money into the PRC ought to pay attention to what happened to Ma. That’s a different China market from the one Ray Dailo, Stephen Schwarzman, Hank Paulson and the like are promising. 

In the real China market, Xi alone will one day decide if you’ve made enough and decide how much of it you may keep.

Besides having been an officer with the US Marine Corps and the State Department’s Foreign Service, Grant Newsham has also worked for a major US investment bank.