Economy & Politics

ColumnIn China, Alibaba falls under the robbers

Capital columnist Bernd Ziesemer
Personal-Financial.com columnist Bernd ZiesemerMartin Kress

Only those who do not mess with state and party leader Xi Jinping will remain powerful and rich in China. The man with the greatest private fortune in the Middle Kingdom now has to go through this bitter experience: the multi-billionaire Jack Ma. Until recently, his Alibaba group was regarded as the megadynamo of the Chinese Internet, as big and profitable as its global competitor Amazon. A group that continues to expand its dominance in online trading and at the same time is constantly conquering new business areas on the Internet. But now Alibaba could fall under the robbers. After a critical speech by the multi-billionaire about the increasing interventions of the Chinese state in the development of the Internet economy, Xi personally stopped the already scheduled IPO of the Alibaba subsidiary Ant in November Word more. Ma has obviously fallen from grace.

The next blow by the state apparatus followed last week: The highest antitrust authority in China initiated a formal investigation against Alibaba for “monopoly practices”. The share price then continued its steep decline with a double-digit daily loss. And since then, speculation has been growing on the Chinese Internet that Ma could soon face even greater disaster. Because of his great sense of mission and his enormous wealth, Ma has evidently become a threat to Xi Jinping’s monopoly of power.

Some China experts even speak of a “Khodorkovsky moment in China”. The Russian oil billionaire Mikhail Khodorkovsky publicly quarreled with President Vladimir Putin in 2003, went to prison a few months later for alleged tax evasion and lost almost all of his fortune after a chain of rigged legal proceedings. Khodorkovsky was only released after ten years in a camp. In the meantime, his fall is considered to be the decisive watershed in Russia’s development back to a corrupt state economy.

Despite all the major differences between China and Russia and between Ma and Khodorkovsky, there is at least one thing in common: in both countries there is no legal security and nobody, but nobody can protect themselves from arbitrary state decisions. Xi Jinping has massively turned back the already modest approaches to a “constitutional state with Chinese characteristics” that had emerged under his predecessors in recent years. The attempt by leading Chinese lawyers to establish independent judicial proceedings at least beyond the political sphere must be regarded as a failure. Some of the lawyers and professors who advocated this path in the 1990s went to prison under Xi Jinping himself.

Outside of China’s internal power apparatus, no one knows whether Jack Ma will get away with it again or if worse is to be expected. The shareholders of the Alibaba group still believe in an amicable agreement, as can be seen from the stock market price of the papers. Should it turn out differently, one must reckon with a shock in the Chinese economy that goes far beyond Jack Ma’s own empire.

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