The move by President Xi Jinping to halt the Ant Group’s IPO may take a subtle backing from the need to beat down competition for the soon to be launched Digital Currency Electronic Payment (DCEP) system.
President Xi Jinping, the Chinese President and leader of the China Communist Party (CCP), has been named as the sole government official who stopped the Initial Public Offering (IPO) of Ant Group, billed to make its dual public listings on the Hong Kong Stock Exchange as well as the Shanghai Stocks Exchange. According to the Wall Street Journal who broke the news based on sources close to the matter, President Xi Jinping decided to stop the IPO following the criticisms of the Chinese Financial regulators by Ant Group’s billionaire controller Jack Ma.
Per the earlier reports, Mr. Ma who ranks as China’s richest man said at a summit organized in Shanghai on the 24th of October that federal regulators are stiffening innovations in the country, a public bashing that reports claim was as a result of a long period of endurance. The public rebuke of the regulators met with a corresponding attack on Ant Group.
The statement spurred the authorities to begin investigating Ant Group particularly in the products they have churned out in the past. As a point to indict the fintech giant, the regulators faulted the Ant Group’s digital financial products like Huabei, a virtual credit card service, to encourage poor and young people to build up debt. While these claims have been widely reported, neither Ant Group nor the general office of the State Council had been reached to provide comments at the time of writing.
President Xi Jinping May Be Fighting Competition as DCEP Launch Nears
The move by President Xi Jinping to halt the Ant Group’s IPO which is on course to be the biggest IPO ($35 Billion) in the world has ever seen may take a subtle backing from the need to beat down competition for the soon to be launched Digital Currency Electronic Payment (DCEP) system being developed by the Chinese government.
The core business model of Ant Group bothers around facilitating or enhancing the existing payment infrastructure in the most populous nation in the world through digital payments. While the DCEP is also aimed at complementing the current payment systems as defined by the People’s Bank of China, it also has the primary goal of bolstering the transactional capacities of the fiat yuan, thus creating a conflict of interest.
With the bulk of the private payment landscape in China been dominated by Jack Ma’s Ant Group, as well as WeChat Pay backed by Tencent, the apparent clamp down on the growth of the former firm by suspending its IPO raises additional concerns.
Though Ant Group has been tipped to make a return in the near future, Jack Ma’s apparent crosshairs with President Xi Jinping may be a long haul should swords not be sheathed as soon as possible.
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