U.S. banks’ plan to co-sponsor IPO to finance Communist China’s “PayPal” blocked by CCP

PBoC – the world’s largest central bank – is controlled by the Chinese Communist Party (CCP)

What a difference a year makes for Jack Ma, founder of Alibaba, the world’s largest wholesaler, and its subsidiary, Alipay (1.2 billion users) – the competitor to America’s PayPal (346 million accounts)..

January 2020 marked celebrations for the U.S. – China trade deal, which did little to help American workers when it eliminated many tariffs, but promised billions in profits for American bankers, credit-card networks, insurance companies and investors, who would be allowed to set up shop in China.

Riding high in 2017, now MIA!

Secretary of the Treasury Steven Mnuchin was instrumental in this bad deal for the U.S., but a great gift for Wall Street.

Mnuchin is a former Goldman Sachs executive, and a member of the “Big Six”, that includes Paul Ryan, Gary Cohn, Mitch McConnell, Orrin Hatch and Kevin Brady. (McConnell recommended Steven to Donald Trump for Treasury leadership.)

Mnuchin and Cohn are members of the Trilateral Commission. So is Eric Pelletier, Vice President and Head of International Government Affairs at Alibaba, NY, and former Deputy Assistant to the President for Legislative Affairs under George Bush.

JPMorgan Chase & Co. and Blackrock were the first to seek licenses to ramp up investment banking and wealth-management divisions in China. Visa Inc. and MasterCard Inc. were next to ask for the Chinese Communist Party (CCP) stamp of approval to have their credit cards more widely accepted.

Suddenly, China changed course, and even Jack Ma, worth $27 billion in 2017, was nowhere to be seen – blackballed because he criticized the establishment.

Is Ma dead, in prison, hiding, or just keeping quiet?

Modern Ali Baba and the 40 Thieves

American investors are not happy. Their scheme to bring U.S.-style investing to China – allowing its economic and military expansion to boom – may now be a pipe dream.

In the planned $225 billion Alipay deal, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Citigroup would be joint sponsors of the Ant Group’s Alipay IPO. Ma didn’t think he could raise enough money in China and wanted American investors to cough up the rest.

This would have been the biggest IPO ever, surpassing the $29.4 billion public offering last December by Saudi Aramco.

Then, last year Ma made a big mistake. One of the richest men in the world, Ma thought he could offer his opinion and folks would listen.

People did listen. Unfortunately for Ma, that included members of the Communist Party, which led to the end of the IPO, and maybe the end of Jack Ma.

He hasn’t been seen or heard from since his comments on the Chinese financial system at the annual People’s Bank of China (PBoC) financial markets forum a few weeks before the IPO was scheduled for November.

The speech criticized China’s regulators and accused its banks of having a “pawnshop mentality” that requires collateral and guarantees, to extend credit, which Ma claimed is incompatible with the need for lenders that can extend credit to parties without substantial collateral, according to the Financial Times.

Chen Zhiwu, professor of finance at Hong Kong University, said that, “originally regulators approved the IPO on the domestic A-share and Hong Kong markets before Jack Ma’s speech.”

But everything changed after the speech, suggesting concern over the attacks on regulators made in the speech, Chen said..

The professor added that authorities have also been concerned over the extensive control of customer data by novel fintech groups like Ant Corp., “with particular concern over monopolistic abuse of power.”

In 2018, the U.S. Committee on Foreign Investment (CFIUS) blocked Ant Financial’s acquisition of U.S. money transfer company MoneyGram, citing national security concerns.

The fintech giant’s technologies are used by the CCP and its People’s Liberation Army, and has participated in creating China’s social credit system, which tracks every move and purchase of Chinese citizens, limiting their job opportunities, travel and public status.

Jack Ma is not the only tycoon missing or punished by the Communists.

Ren Zhiqiang, real-estate developer with 37 million internet followers, disappeared in March last year, after accusing the Party of  mishandling the coronavirus pandemic, according to The New York Times. Beijing later sentenced him to 18 years in prison.

Other critics of response to the pandemic, Xu Zhangrun, a law professor, and Zhang Xuezhong, a human-rights lawyer, were also arrested.

Dissenters are “re-educated”

Xiao Jianhua, an asset manager, was abducted from a Hong Kong hotel and disappeared into Chinese custody. The Party later seized much of his company, Tomorrow Group. He was accused, along with other billionaires, of  “taking would-be investors away from Chinese stock markets”, according to The Guardian newspaper.

China has one political party, which selects the only candidates for election and controls all media, deciding what is reported, rewarding acquiescent journalists and punishing others. The government monitors all posts on Internet – including social media – censoring posts and removing or suspending user accounts.

Phone calls and emails are reviewed to “ensure public safety”, according to officials, and such mass surveillance can also be used to crush dissent. The CCP operates concentration camps for re-education of citizens who express opinions not permitted by the Party. This is done in the name of public safety and protection from “dangerous” ideas.

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