Billionaire Jack Ma was one of China’s biggest success stories. The government turning on him speaks to an animosity against billionaires in the Communist country.

Jack Ma
  • China has cracked down on Jack Ma and his companies Ant Group and Alibaba recently.
  • The government may be targeting him, but China is also focused on reining in billionaires at large.
  • A wealth gap has widened, posing issues for the communist nation, which strives for distributed wealth.
  • See more stories on Insider’s business page.

When Jack Ma’s Ant Group IPO was yanked by Chinese regulators last fall, it was easy to view it as merely a sign of China’s firm hand.

Ant had ballooned into an independent force alongside the state-controlled Chinese bank system, and the halted listing came just after Ma brazenly and publicly criticized the nation’s banking rules. Simply put, he spoke out against the country’s lack of a traditional financial system and the large role that the Party plays in lending money, as Nikkei Asia reported.

News later surfaced that Chinese President Xi Jinping personally instructed authorities to look into Ant. Now, Ant – which was once praised as a fintech disruptor on the global stage – will likely, eventually, be majorly run by the state.

But the government’s takedown of Ma may be indicative of a larger zeroing-in on billionaires in the country as an existing wealth gap grows wider, a gap that has been exacerbated by the pandemic.

Disdain for the Communist country’s affluent population has grown, as the New York Times reported, and the government is leaning into that anti-rich sentiment as it’s broken down the power constructs that Ma has built in the country.

A widening wealth gap in China

Communist China once embraced a more capitalist-friendly free market in the 1980s, and when it did, some citizens saw their wealth skyrocket, as Bloomberg reported in December. Solidified social classes emerged, making it easier for the wealthy to maintain and grow their fortunes – but also more difficult for lower-income people to get richer.

Today’s rising housing costs in China’s cities and a squeezed white-collar job market with lower pay presents problems for the country’s young and educated in securing financial stability, per the NYT report. Those woes have stirred an animosity of the wealthy in China – as Bloomberg reported, the children who were born into money now find themselves under the scornful eye of the nation’s leader.

Besides the US, China has the most billionaires out of every country in the world – 626 to be exact, according to Forbes. Beijing itself has more billionaires than any city in the world. But about 600 million of its 1.4 billion-strong population earn $150 a month or less, as the NYT notes.

Such economic disparities have caused political problems for the Chinese Communist Party, which strives to preserve an evenly distributed wealth system. And Ma, with his $50 billion in net worth, is among its targets.

With a widening wealth gap, and billionaires like Jack Ma exhibiting that their companies can grow into the powerhouses that they are, China is hell-bent on preventing “the disorderly expansion of capital,” as Chinese leadership said in December.

alibaba jack ma NYSE
Alibaba went public on the NYSE in 2014.

China is tightening its grip on its economy

China is singling out companies and figures across industries in its quest to rein in the economy, from Swedish retailer H&M to homegrown tech giants, which have largely enjoyed a lack of regulatory constraints.

The government rolled out a set of new anti-competitive behavior rules for internet companies like Alibaba in November. It included guidelines to prevent companies from sharing sensitive user data and from joining together to stomp out smaller competitors.

Alibaba CEO Daniel Zhang said shortly after that he welcomed the new rules. And last week, Chinese authorities fined Alibaba what equals $2.8 billion USD over concerns that it was abusing its dominant market position.

Read more: China’s antitrust probe into Alibaba could be an opportunity for other cloud players – including Amazon, Microsoft, and Google – to swoop in

China was hoping other tech giants would take it as a warning, and it looks like they have. About three dozen Chinese tech companies, including TikTok owner Bytedance, JD.com, and the Twitter-like Weibo, have vowed to adhere to China’s new anti-competitive laws, according to a report from the Wall Street Journal. They are also pledging to keep the party’s values at the forefront of their minds in hopes of escaping Ma’s fate.

The Ma-China debacle signals that turbulent times may lie ahead for innovation in China, as the Communist Party and its leaders demand that the country’s business community put patriotism above all else.

Read the original article on Business Insider