Reports from China indicate that the Chinese government may be working on a plan to nationalize Jack Ma's Alibaba and the Ant Group. China's ruling Chinese Communist Party (CCP) has gone further ahead with the antitrust investigation into e-commerce giant Alibaba.
"Based on tip-offs received by the State Administration for Market Regulation in recent days, the administration will be investigating Alibaba ... for suspected monopolistic activities," the government said.
The investigating agencies had set up an office at the Alibaba headquarters in November. Apart from the e-commerce giant, investigators are also probing social media giant Tencent and e-commerce company Meituan.
The news of the government's plan to enforce more curbs on Alibaba sent its stock spiraling down as much as 8 percent. Alibaba said in a statement it would cooperate with any investigation. "Today, Ant Group received a meeting notice from regulators," Alibaba said in a statement.
Decision Taken at Highest Levels of CCP
Meanwhile, sources have said the development is a proof of China's resolve to nationalize Alibaba. Song Qing, Internet finance industry insider, said the investigation is part of CCP plans to nationalize both Ant Group and Alibaba. "There will definitely be an outcome, now that they have started the investigation ... This is probably coming from the highest levels," he told Radio Free Asia.
The suggestions are that the plan to nationalize Alibaba has come from the very top of the ruling Communist Party structure. A few days ago, the People's Daily, the official mouthpiece of the CCP, said the government's "anti-monopoly work" will lead to "better development." The paper said the party Politburo thought 'anti-monopoly work' should be strengthened to prevent the disorderly expansion of capital.
Song Qing agrees with the view. "Just a couple of weeks ago, they set out plans to nationalize Ant Group and Alibaba; the timing was deliberate ... Those plans all came from the central leadership," he said.
He also added that the government wants to make a lesson out of Alibaba. "These nationalizations are definitely happening, and [the antitrust investigation] will likely speed up that process ... It's also, I think, about making an example of [Ant and Alibaba]," he said.
As the antitrust probe progresses, the People's Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange will also get involved in the investigation against Alibaba.
Xi Jinping, Chinese President and CCP general secretary, had said in October that the plan was to make China a more state-controlled economy based on domestic demand. Observers think China's political economy is poised to see major changes. Many believe that Xi will change the pattern of property ownership in the country.