China’s Pro-Monopoly Antitrust Crusade
China's leaders are probably right that reining in the private sector will strengthen their grip on power in the short term. But, in the longer term, the biggest casualty of China’s “antitrust” crackdown may be the one monopoly it is meant to protect: the Communist Party's lock on political power.
CLAREMONT, CALIFORNIA – The Chinese government’s newly launched antitrust probe into Alibaba is probably warranted. The e-commerce giant undoubtedly has a dominant market share and engages in monopolistic practices, such as forcing merchants to make the company their exclusive online distributor or be delisted from its platforms. But other Chinese e-commerce companies have the same rule, and there are worse monopolists in China than Alibaba. So, why is Alibaba being targeted?
One of Alibaba’s apparent offenses is the expansion of financial services offered by its affiliate, financial-technology giant Ant Group, which owns Alipay. Beyond being the world’s most popular payment app, with 730 million monthly users, Alipay allows consumers to invest, purchase insurance, and secure loans on its platform.
Last October, Ant Group was poised to launch a record-setting $34 billion initial public offering. But the Chinese authorities abruptly halted it, in what was portrayed as a prudent attempt to limit the company’s exorbitant market power. The decision to block the IPO reportedly came directly from President Xi Jinping.