Chinese billionaire Jack Ma has been hiding a dirty secret
And it involves a high level power struggle
within the Chinese Communist Party
Welcome to China Uncensored, I’m Chris Chappell. And boy do I have a doozy of
an episode for you today. But remember, YouTube is demonetizing us all the time.
The only reason I can bring you these episodes is thanks to the support
of viewers like you on the crowdfunding website Patreon. Head over to Patreon.com/ChinaUncensored,
and for as little as a dollar an episode, you can help me make this show.
Now as you may remember, one of China’s richest men,
Jack Ma, disappeared for three months after criticizing state regulators.
Generally the Chinese Communist Party doesn’t take criticism well. And during the time Ma was
“disappeared,” the Communist Party blocked the IPO of Ma’s company Ant Financial.
That IPO would have been worth over 300 billion dollars.
Now Ma has recently been appearing in public again.
But it turns out there was much more to this story than what was previously reported.
The Party didn’t block Ant Financial’s IPO just because Jack Ma criticized Chinese regulators.
I mean, that didn’t help. But it was also about a deadly battle for power between rival
factions within the Chinese Communist Party itself. And you know what that means. It’s
time for another episode of everyone’s favorite Communist Party soap opera, General Hostility.
Previously on General Hostility: Chinese leader Xi Jinping
is locked in a desperate bid for power. His enemies—a rival political faction tied to former
Chinese leader and human toad hybrid Jiang Zemin. Jiang’s connections spread out like a spider web
throughout China, waiting to ensnare Xi Jinping. And this time the bait...is an Ant.
That’s right, it turns out Jack Ma and Ant Financial have some pretty close ties to
Jiang Zemin’s faction. And that could be the real reason Xi Jinping blocked Ant Financial’s IPO.
Because according to the Wall Street Journal, Xi personally blocked the IPO.
You know, that time Jack Ma did a cringe-worthy Michael Jackson impersonation on stage—turns
out, it wasn’t the most ill-advised decision he’s ever made after all.
At least when he says that Billie Jean is not his lover, I believe him.
Anyway, back to less disturbing topics, like Communist Party factional infighting.
More than a dozen Chinese officials and government
advisers secretly spoke to the Wall Street Journal for this article.
They told the Journal of “a previously unreported central-government investigation”
...that found through an opaque web of investment structures,
that some of Xi Jinping’s biggest enemies were heavily invested in Ant Financial. And they all
stood to make billions of dollars from the IPO. That is, until Xi Jinping (Corner Box) stopped it.
It turns out the grandson of former Chinese leader Jiang Zemin,
Jiang Zhicheng, was a major investor in Ant Financial.
But it was well hidden. But I’ll uncover it after the break.
Welcome back. Jiang Zhicheng was a major investor in Ant Financial—but
here’s how it was hidden. Jiang Zhicheng cofounded a company called Boyu Capital. Then Boyu Capital
set up this subsidiary in Shanghai. Which then put money into a private equity firm called Beijing
Jingguan Investment Center. And it was that company that finally invested in Ant Financial.
It’s like six degrees of Kevin Bacon, but with investment firms
that funnel millions of dollars to China’s corrupt elite.
The Beijing Jingguan investment firm eventually got “a nearly 1% stake in the company,
according to Ant’s IPO document, putting it among its top 10 shareholders.”
However, in Ant Financial’s official documents,
there’s no mention of how Beijing Jingguan relates to Jiang Zhicheng or his other companies.
But it turns out Jack Ma and Jiang Zhicheng go way back.
In fact, Jiang Zhicheng played a big role in making Jack Ma one of China’s richest
men. It has to do with a deal that gave Ma more control over another company Ma created, Alibaba.
Back in 2012, Zhicheng led a group of some of China’s biggest
state-linked investment firms to help Ma buy out half of Yahoo’s stake in Alibaba.
And that chunk of Alibaba, “soared in value when
the company listed on the New York Stock Exchange two years later.”
So a lot of people tied to Jiang Zemin
made a lot of money. But the connections between Ma and Jiang Zemin go beyond Jiang’s grandson.
I’ll tell you more after the commercial break.
Welcome back.
Why did Xi Jinping block the IPO of Ant Financial? According to the Chinese officials who secretly
spoke to the Wall Street Journal, Xi Jinping had little interest in having the Ant IPO
funnel enormously lucrative financial stakes to his political enemies.
And it was much more than just Jiang Zhicheng, the grandson of former Chinese leader Jiang Zemin.
Also secretly invested in Ant Financial was the son-in-law of a powerful retired Party official
in Jiang Zemin’s faction. This is Jia Qinglin. He’s a former member of the Politburo Standing
Committee, the most powerful group of men in China. He was very close with Jiang Zemin.
Well, Jia Qinglin’s son-in-law is Li Botan. He controls the Beijing Zhaode Investment
Group. And through a series of different companies, he invested big in Ant Financial.
This is not the first time Li Botan and Xi Jinping have gone to blows either.
Li owned a fancy private club for Communist Party elite called the Maotai Club. Xi was not a fan.
“Events like those held by Mr. Li’s Maotai Club were seen by [Xi Jinping] as harmful to the party.
‘You people, you either eat and drink yourselves into the grave,
or die between the sheets,’ he said at a meeting with senior officials earlier in his tenure.”
Somehow I get the feeling Xi just wasn’t invited to the parties.
But these kinds of complicated political connections are just how business is done
in China’s corrupt system. China’s economy may look like capitalism,
but it’s not a free market. It’s actually under heavy Communist Party control.
It wasn’t just people tied to the Jiang faction that got rich through investing in Ant Financial.
Plenty of other rich and powerful Chinese elite also had a stake. And Ma also
encouraged investment from Chinese state-run investment funds, too. Which was a smart move.
See, Jack Ma became successful, not through his ideas and hard work alone.
No, he was only able to make it because in the process,
he made well-connected Party leaders rich as well. He was able to avoid a lot of regulatory pressure
on Ant Financial by giving state backed companies and powerful individuals a stake in the company.
“Having such ‘strategic investors’ on board—all poised to profit from the IPO—helped
Ant’s stock-listing application sail through various levels of
securities regulators last summer...The application was approved in a month.”
Of course, if you find yourself on the wrong side of a power struggle,
those same connections end up hurting you. The Chinese Communist Party can take away
the promise of a free market based on its political whims. That’s because
it was never a free market in the first place. It was always Party controlled. And it can
also take away your personal freedom, and make you vanish anytime it wants.
Now, I’m not saying that Jack Ma and Ant Financial’s connections to the Jiang faction
are the only reason that Xi Jinping blocked Ant’s IPO.
From the Chinese regime’s point of view, there were other problems, like the fact that Ant
Financial was making money from people’s data but not sharing that data with the government.
And it was making loans and selling financial products without having to meet the same
requirements as a bank. Basically, it could make money off of financial transactions,
while state-run banks actually supplied the money for the loans and took on most of the risk.
So if people couldn’t pay back those Ant Financial loans,
it’s actually the state-run banks that would be in trouble.
But adding the fact that the Ant Financial IPO would enrich
the close relatives of his political enemies,
well I’m just going to guess that cancelling it wasn’t a really hard decision for Xi Jinping.
In any case, the situation with Ant Financial shows pretty clearly all of the deeply entrenched
ways that Chinese Communist Party officials and their relatives are getting rich in China.
But what will the aftermath be?
Chinese leader Xi Jinping stopped his enemies from getting rich quick. Well, from getting even
richer, quick. And China’s highest paid Michael Jackson impersonator got burned in the process.
So what happens next? Will the Jiang faction try to get back at Xi Jinping for making them less
rich? Will they try to get rid of Xi entirely? Find out next time, on General Hostility.
And now, as a thank you to everyone who’s joined the China Uncensored 50 cent Army
and supports China Uncensored on Patreon, I’ll answer one of their questions.
Today’s question comes from Lunar Worx “Hey Chris, what does Matt do off screen?
Is he there for comic relief, or just to do all your top secret research?”
Oh that’s a good question Lunar Worx. Obviously I can’t mention all the top secret stuff Matt does.
Or it wouldn’t be top secret.
But Matt does a lot for the show. Why, he’s recording me right now.
He also helps manage our team and keeps everything running smoothly.
About the only thing he doesn’t do is help water the plants. That’s my job. And of course,
he’s the one we make watch things like the Hunter Biden sex tapes. And we all know how that went.
He’s sacrificed a lot for this show.
So thank you Lunar Worx and all the 50 Cent Army
for supporting the show. So we can make Matt do all kinds of things.
Once again I’m Chris Chappell. Thanks for watching China Uncensored.