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Jack Ma learns it's hard to f-ck with Xi.

Jack Ma: The Ant at Xi Jinping’s Picnic

The Communist Party can’t tolerate a private individual with enormous wealth and public influence.

By The Editorial Board, WSJ

Updated Jan. 11, 2023 10:39 am ET

Chinese President Xi Jinping is a busy man these days as he copes with his country’s zero-Covid disaster, popular discontent, a real-estate meltdown, rising tensions with neighbors and a host of other ills. But the weekend’s travails at Ant Group signal Mr. Xi still finds time to pursue a crackdown on China’s tech economy.

Ant announced it has defenestrated its founder Jack Ma, or rather that he has defenestrated himself for the good of the company. The reduction of his voting rights to 6.2% from a little above 50% means that he and nine other Ant executives and employees will have voting rights at the company and can exercise their power independently of each other. This is supposed to clear the way for an initial public offering of shares originally scheduled for late 2020 that was delayed indefinitely after Mr. Ma dared to criticize China’s financial regulators.

Mr. Xi’s regulatory war on Ant is part of a broader crackdown on China’s booming tech industry. The Communist Party is anxious about a proliferation of businesses that connect Chinese citizens to each other and to resources (such as capital, in the case of fintech Ant) and collect data on users without state oversight and direction. Online tutoring and food-delivery firms are among the many others that have joined Ant in the dock.

Mr. Ma’s rags-to-riches biography and charisma raised the prospect that successful companies could boost the profiles of individuals who rival Party bosses for public influence. Mr. Ma’s widely discussed complaint in 2020 that Chinese regulators are too hidebound and the country needs more innovative thinking illustrated the Party’s problem. One report says Mr. Ma has been living in Tokyo for nearly six months amid the crackdown.

Mr. Ma’s forced exit is a warning to other Chinese entrepreneurs that they can grow their businesses and their own profiles as much as the Party allows and no more. Since the IPO may be worth much less in today’s market than it would have been in 2020, the delay also will punish early investors in Ant who might have hoped the IPO would let them cash out.

Foreign businesses, take note. Beijing is wooing investment with promises that the Chinese economy remains fundamentally on track. But that track now involves more state control and less business freedom despite the successful 30 years of reform before Mr. Xi took power. The main targets for now are Chinese companies such as Ant. Don’t assume it will stay that way.

Correction: A previous version misstated the nature of the change in Mr. Ma’s ownership.

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