China has levied fines exceeding $1 billion (£778 million) against several financial companies, including Ant Group, the tech giant led by Jack Ma.
Regulators cited violations of consumer protection laws and corporate governance as the reasons behind the fines imposed on the companies, including Ant Group.
Ant Group, the operator of payments firm Alipay, had emerged as a prominent target as authorities aimed to strengthen control over the sector. However, this recent development also indicates a potential conclusion to the regulatory crackdown on the industry.
The Chinese central bank and securities regulator stated in their announcement that they are transitioning away from their campaign to reform tech giants and adopting a stance of “normalised supervision.”
According to the central bank, the fine imposed on Ant Group includes the confiscation of over 550 million yuan (£59 million) in “ill-gotten income.”
Ant Group, renowned for providing loans, credit, investments, and insurance services to a vast customer base of individuals and small businesses, expressed its commitment to diligently and sincerely comply with the terms of the penalty.
Following the news, the announcement of the crackdown nearing its conclusion prompted a surge of nearly 10% in the US-listed shares of e-commerce giant Alibaba, which holds a significant stake in Ant Group. This development delighted investors.
In recent years, concerns about risky lending and President Xi Jinping’s efforts to strengthen state control over the economy have cast a shadow on the investment prospects of China’s tech sector.
The sudden suspension of Ant Group’s highly anticipated public listing in 2020, following a speech by Mr. Ma that was perceived as critical of the government, triggered concerns that resulted in significant value losses amounting to billions in the sector.
Ant’s ascent had been widely perceived as a challenge to China’s state-dominated financial landscape, with the government expressing concerns about excessive personal debt and lending in the private sector.
In recent years, the country has introduced a series of new regulations targeting technology companies, addressing a wide range of issues including data protection and competition.
In 2021, Alibaba faced a $2.8 billion (£2.1 billion) fine following an anti-monopoly investigation. Other companies, including Chinese ride-hailing giant Didi and food delivery firm Meituan, have also been subjected to penalties.
On Friday, fines were also imposed on Tencent, a competitor of Ant Group known for WeChat and Tenpay, with an amount totaling nearly 3 billion yuan (£323 million).
According to Tencent’s chairman, Ma Huateng, he believes that the government is now likely to shift its focus towards “supporting and encouraging platform companies.”
After establishing Alibaba in 1999, Mr. Ma, who started his career as an English teacher, became a billionaire. In January, he relinquished control of Ant Group, and in March, he was spotted in China after a prolonged period of absence.
Source : bbc.com
