https://www.neican.org/p/briefing-alibaba-fine-huawei-and
12 April 2021, Yun Jiang and Adam Ni
Chinese authorities hit Alibaba with a ¥18.2 billion fine on Saturday for abusing its market dominance, restricting competition and stifling innovation.
Last November, Beijing torpedoed Alibaba’s sister firm Ant Group’s IPO at the eleventh hour. In December, the State Administration for Market Regulation announced its investigation of Alibaba.
Alibaba should be counting its stars if this is the end of the story. The fine is small change for the tech giant, only amounting to 4 per cent of its 2019 revenue from China. But more likely Beijing is just getting warmed up.
The Chinese leadership has designated “strengthening anti-monopoly work and preventing disorderly capital accumulation 强化反垄断和防止资本无序扩张” as one of the eight economic policy priorities for 2021. The targets are tech giants that run the most prominent internet platforms in China. Tencent will likely be the next in line to be roughed up.
Beijing’s new zeal for “anti-monopoly” has several drivers. China’s super internet platforms (such as WeChat) pose actual market competition, innovation, and consumer rights issues. More broadly, China is grappling with how to regulate new technology like most countries.
But more interesting for us, this is about political economy. In Xi’s words, “the foundation of [China’s] political economy can only be Marxist political economy, not other economic theories”. In practical terms, this means that “the leading role of the state-owned economy must not be altered.” Beijing’s campaign to rein in China’s tech giants is part of a broader trend towards tighter state control over the economy.
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