Ant Group, the fintech affiliate of tech giant Alibaba, has been hit with a huge fine – the final blow dealt in China’s crackdown on tech companies and entrepreneurs.
In a public statement on its official WeChat account, the National Administration of Financial Regulation (NAFR) issued Ant Group a 7.21 billion (1 billion USD) RMB fine for violation of a broad spectrum of laws and regulations, including consumer protection and anti-money laundering laws. Tenpay, Pingan Bank, and Postal Savings Bank of China were also fined, bringing the total amount of fines to over 10 billion RMB (1.4 billion USD).
The NAFR’S statement referred to the long-running tech crackdown, saying regulatory bodies have “guided” Ant Group, Tencent, and other internet companies to “comprehensively rectify legal problems in their financial activities” since November 2020. It goes on to say that most of these issues have been rectified and that the administration will move on to focus on “normalised supervision.”
This mention of a shift in focus is tantamount to an official end to the crackdown, which began when Alibaba founder Jack Ma delivered a speech in 2020 that criticised regulatory bodies. During the period of intense scrutiny that followed, the government blocked the IPO of Ant Group (which had raised the world’s largest ever valuation), Jack Ma left China, and Alibaba was fined 2.8 billion USD for anti-competitive practices.
The tech crackdown has been widely touted as over since the Alibaba restructure announcement in March of this year. The move will see Alibaba split into six new units each with its own CEO. Alongside Jack Ma’s return to China, the move has been called a “new era” for Alibaba.
Many commentators see the overhaul, which also entails IPOs for five of the six new units, as a gesture of goodwill towards the private sector. As a result, foreign investment shot up after the announcement, with the Shanghai Stock Exchange closing out at a 5.9% gain at the end of March – its strongest quarter in two years.
The Ant Group fine on July 7 was one of the first major moves from NAFR, which was established in May this year to bring financial regulation under the control of the State Council for more effective oversight. US shares in Alibaba surged by almost 10% following the announcement.