China has imposed fines exceeding $1bn on several financial companies, including Ant Group, led by Jack Ma. Regulators cited violations of consumer protection laws and corporate governance as the basis for the fines. Ant Group, known for its payment service Alipay, was one of the most prominent targets as Chinese officials aimed to strengthen control over the sector. The central bank announced that the fine for Ant Group also included the confiscation of “ill-gotten income” amounting to over 550 million yuan.
The move by Chinese regulators signifies a shift in focus from their campaign to reform tech giants to a more “normalised supervision” of the industry. Ant Group, which provides various financial services to millions of customers and small businesses, expressed its commitment to complying with the terms of the penalty.
The announcement of the fines resulted in a nearly 10% surge in the US-listed shares of Alibaba, which owns a significant stake in Ant Group, indicating investor optimism that the regulatory crackdown is coming to an end.
China’s tech sector has faced uncertainties in recent years due to concerns about risky lending practices and President Xi Jinping’s efforts to enhance state control over the economy. Ant Group’s highly anticipated public listing was abruptly halted in 2020 following a speech by Jack Ma that was perceived as critical of the government. The incident raised fears and led to significant value losses in the sector. Ant Group’s rapid growth had posed a challenge to China’s state-dominated financial landscape, prompting the government to address issues of personal debt and lending in the private sector.
China has introduced a series of new regulations in recent years, targeting tech companies and addressing concerns related to data protection and competition. Previous penalties were imposed on Alibaba, Didi, and Meituan. In 2021, Alibaba paid a $2.8bn fine after an anti-monopoly investigation. Tencent, a rival of Ant Group known for WeChat and Tenpay, will also face fines amounting to nearly 3bn yuan.
Tencent’s chairman, Ma Huateng, expressed his belief that the government can now shift towards supporting and encouraging platform companies. Jack Ma, who relinquished control of Ant Group in January, made a public appearance in China in March after an extended period of absence.