Alibaba Headquarters Located in Hangzhou City
Three Current and Former Officials Fall from Power in One Month
State Media: "Managing Government-Business Relations"
[Asia Economy Reporter Cho Hyun-ui] High-ranking officials in Zhejiang Province and Hangzhou City, where the headquarters of Chinese e-commerce giant Alibaba is located, are being investigated one after another on corruption charges. Authorities explained that this is part of the ‘common prosperity’ campaign proposed by President Xi Jinping.
According to Bloomberg News and local media on the 23rd (local time), Zhou Zhangyong, Secretary of the Hangzhou Municipal Party Committee, has been under investigation by the Central Commission for Discipline Inspection since the 21st for serious violations of discipline and law. Bloomberg reported, "Although the specific charges have not been disclosed, the Central Commission for Discipline Inspection used terminology typically employed in corruption investigations in its related statement."
In China, rumors are circulating mainly on social media that this investigation is related to Alibaba’s fintech affiliate Ant Group. It is said that Zhou’s family purchased stocks worth 500 million yuan (approximately 90.3 billion KRW) in a Zhejiang fintech company just before its planned listing in November last year, but when the listing was suddenly canceled, they received 520 million yuan in return.
The only fintech company in Zhejiang Province that was preparing for an IPO at that time is Ant Group. Ant Group issued a statement denying the allegations, saying, "We strictly complied with laws and regulations during the IPO process, and there was no situation where the related person mentioned in the rumors purchased stocks."
Authorities explained that Zhou’s sudden downfall is part of President Xi’s recently announced ‘common prosperity’ initiative. The state-run Global Times said on the 24th, "(The investigation into Zhou) will serve as an example for other wealthy cities," adding, "It once again demonstrated the principle of China’s anti-corruption campaign that there are no sanctuaries for corruption." It also added, "The work to redefine the relationship between the government and enterprises has begun."
In the past month, a total of three current and former officials in Zhejiang Province, including Secretary Zhou, have been removed from office. Zhang Suyitang, former Deputy Secretary-General of the Zhejiang Provincial Government, confessed to serious violations of discipline and law on the 22nd of last month and is under investigation by the Zhejiang Provincial Discipline Inspection Commission, while Ma Shahui, Deputy Secretary of the Standing Committee of the Zhejiang Provincial People's Congress, has been under investigation since the 19th.
Authorities are also conducting a large-scale investigation targeting current and former senior officials in Hangzhou City. The Central Commission for Discipline Inspection stated, "As part of managing clean relations between the government and enterprises, the Hangzhou supervisory authorities are conducting special crackdowns targeting key cadres throughout the city." The investigation targets former and current cadres within three years of retirement, including their spouses, children, and children’s spouses.
As the authorities’ efforts to root out ‘Alibaba collaborators’ expand from Hangzhou City to the entire Zhejiang Province, there is speculation that this could even affect China’s next power structure. The Wall Street Journal noted, "Attention is focused on whether Li Qiang, Party Secretary of Shanghai, who can influence the Shanghai Stock Exchange, will be included in the investigation." Li Qiang, one of the 25 members of the Politburo, the core of the Chinese Communist Party, is considered a candidate for the next top leader.
Meanwhile, the prevailing analysis regarding these moves by the authorities is that the Chinese Communist Party perceives big tech companies as potential threats to the regime. According to local media, the authorities recently halted the IPOs of 42 companies. The Shenzhen Stock Exchange suspended 34 IPOs on the 18th, including that of BYD’s semiconductor subsidiary. The Shanghai Stock Exchange also suspended eight listings on the STAR Market, a market for emerging technology companies, between the 19th and 20th.
The China Securities Regulatory Commission (CSRC) cited the need to investigate intermediaries of these companies as a major reason for the suspension. The CSRC stated, "We will strictly block access to the capital market and will show no leniency toward any market violations."
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