What really brought about Jack Ma's "downfall"?
This previously unplanned post will review a historic event in China’s tech and financial markets.
In late 2020, after a super controversial speech by Jack Ma at a high-profile finance summit criticizing China’s banking sector, the highly anticipated IPO of Ant Group (the parent company of Alipay) was abruptly canceled. Later, Jack Ma was placed under a shadow ban and almost never appeared publicly since then.
To be sure, he was not imprisoned, nor had he gotten some hefty fines on his head, nor was his multi-billion stake in Alibaba taken away from him. He was merely sidelined from a public image perspective. (Socialism with Chinese characteristics, where some of the out-of-favor businessmen are basically forced to go on vacation.) Nor did the market blink too much back then. There was an initial shock, but the market shrugged it off and had a good run of a “crazy bull,” which only peaked several months later, in early 2021.
Only then did the super bear market, which lasted for 4 years, begin, and a narrative began to take hold that China is cracking down on the private sector, aided by the nasty optics of the botched education crackdown.
Jack Ma sat at the center of that narrative. For years, he was used as the poster child by Western media to reinforce the “private economy crackdown” narrative, to the point that many folks in the outside world actually believed Jack Ma was arrested. (He was not.)
But then we start to see more people questioning that narrative. For example, yesterday, I saw another interesting X post comparing Jack Ma to Elon Musk:
Okay, I am now beginning to understand why Xi Jinping cut Jack Ma down to size. (Jack Ma's net worth is $25 billion, still enormous, but not large enough to buy enough influence to form a parallel Government).
This X post really triggers a memory floodgate for me. For many years, I have shared sporadically my non-consensus views about the Jack Ma episode with the people I know. This is a chance for me to consolidate these thoughts.
Jack Ma, as the political man
My conclusion first: Jack Ma’s prison-less and penalty-less “downfall” was the result of his own failed political gambit, not of China’s crackdown on the private sector.
For many years, he had been successful at seeking power, and he tried to seek more, but he failed this time and got punished. That’s the crux of it.
Instead of being the face of private business, Jack Ma had way more political ambitions than the Western world cared to recognize. At his height, he was nicknamed “Governor Ma马省长,” as the Alibaba economy that he commanded was more than the GDP of any province in China. His clout was also comparable to a provincial boss, proven by several high-profile “victories” against similar levels of officials. In one instance, in a highly publicized 2015 argument between Alibaba and the State Administration of Industry and Commerce, he was powerful enough to make that ministry-level body retract a criticism and to make the minister at the time visit him as a token of goodwill.
