The Chinese communist party (CCP), in its quest to intimidate large-scale businesses and their founders, has aggressively choked off financing to nonstate entities they view as unaligned with the party’s economic or political goals, according to media reports.
The party-cum-state has begun its long-awaited crackdown on big businesses that refused to endorse the Party’s repressive policies, said the digital publication Financial Post in its recent report titled “CCP’s intimidating tactics against Technocrats and Big Businesses in China”. The report states the situation of Chinese billionaire Jack Ma is telling of the CCP’s tactics of intimidation through coercive means. This has invariably caused fear amongst other business owners that had previously raised similar concerns.
Ma, who was once the richest business leader in China, shifted to neighbouring Japan, amid the Chinese government’s crackdown on the country’s technology sector and its most powerful businessmen, the British daily Financial Times reported.
He vanished from the public eye after he slammed Beijing Chinese regulators in 2020, accusing the state banks of having a “pawnshop mentality”. He even called for the introduction of bold new players that could extend China’s credit to the collateral poor.
After the criticism, Ma’s Ant group and e-commerce giant Alibaba faced a series of regulatory hurdles.
Chinese regulators called off Ant’s blockbuster USD 37 billion initial public offering and fined Alibaba a record USD 2.8 billion for antitrust abuses last year, said The Financial Times report.
According to the United States-China Economic and Security Review Commission (USCC), under Xi, “China’s financial regulators have also aggressively choked off financing to nonstate entities they view as unaligned with the CCP’s economic or political goals.”
The US government’s independent agency said China’s government also exacerbated the economic slowdown in 2020 and 2021 by blocking bank lending to highly indebted property developers.
In other areas of CCP economic decision-making, policy toward the nonstate sector under Xi has been guided by a “Party knows best” mentality.
Further embedding of Leninist political institutions in China’s nonstate firms increases top-down control and drives companies to fill political rather than market objectives, according to USCC.
This approach treats the market as a tool to allocate resources toward ends predetermined by the CCP and is skeptical of any market function beyond serving policy goals.
