Any such notions were dramatically dispelled in the autumn of 2020. Ant Financial – a spinoff of Alibaba specializing in fintech services – was due to be dual-listed on the Shanghai and Hong Kong stock exchanges on November 5. Ant’s IPO generated huge excitement amongst investors, and was to represent the world’s largest ever (with a predicted valuation of \$313 bn). A week beforehand, however, Jack Ma (Alibaba and Ant founder) delivered a potent speech to assorted bankers and party-state officials at the Shanghai Bund Forum. He attacked China’s state-dominated financial system, which he accused of having a ‘pawnshop mentality’. He lamented that there are ‘no systemic financial risks in China because there’s no financial system in China’, emphasizing the country’s strict regulations on private lending (Collier, 2022, 2). Ma proposed opening the financial sector to digital platforms, with big data to be used as a source of trust rather than traditional collateral (exactly what Ant set out to achieve with its AliPay system). The response from the party-state was swift. Two days before the IPO was due to proceed, the Shanghai Stock Exchange posted a notice suspending the IPO due to disclosure issues. Rumour had it that Xi Jinping had intervened directly.
The year that followed witnessed a dramatic ‘regulatory storm’, as interventions tore through the business operations of China’s digital giants (Naughton, 2021). Tencent, Alibaba, and Meituan faced antitrust fines surrounding their sprawling acquisition strategies and engagements with suppliers. Tencent also suffered the consequences (alongside rival NetEase) of a crackdown on young people’s video gaming habits. Education platforms offering for-profit tutoring services were banned outright. And major players in the transport service platform sector such as Didi and Full Truck Alliance faced protracted scrutiny over their cybersecurity and export of user data. The storm culminated in the world’s first regulatory frameworks for recommendation algorithms and generative AI.
The regulatory storm hit China’s highly valued platform firm stocks hard, contributing to the broader wipeout of \$6 trillion from Chinese equities from 2021–4 (Vishnoi and Yang, 2024). But even more significantly, it laid bare how deeply China’s platform economy was both exposed to and imbricated with the Chinese state (To, 2023). Such dramatic and public interventions against large private-sector firms had previously been rare in China, where subtler methods of ensuring political acquiescence were typically favoured – and regulators thought to lack the toolkit necessary to effectively corral private enterprise to pursue political ends (Collier, 2022). This regulatory overhaul precipitated a new era in which high technology was increasingly put ‘in service of the state’ (Segal, 2018).
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Reinventing Capitalism