The views expressed by contributors are their own and not the view of The Hill
A woman rides a scooter past the company logo outside the Alibaba Group headquarters in Hangzhou, in eastern China’s Zhejiang province, May 27, 2016. Shares of Chinese e-commerce firm Alibaba Group Holding plunged as much as 10% in New York after it said Thursday, Nov. 16, 2023, that plans to spin off its cloud business were scrapped, citing uncertainties due to U.S. chip restrictions. (AP Photo/Ng Han Guan, File)
While Chinese leader Xi Jinping was meeting with President Biden and dining with 300 American CEOs in San Francisco on Nov. 16, news emerged that Chinese billionaire Jack Ma’s family trust was set to sell 10 million American Depository Shares of Alibaba Group Holdings on Nov. 21, fetching approximately $871 million.
Ma’s move could not have come at a worse time for Alibaba. The Chinese e-commerce giant recently reversed plans to spin off its cloud operations and halted the listing of its supermarket unit, both crucial avenues for unlocking the value of its expansive business. This shift in strategy is believed to be influenced by the United States imposing tighter restrictions on chip sales to China.
The South China Morning Post, owned by Alibaba, reported that Ma is “very positive” about the company, intending to retain his shares, according to a communiqué from his office. However, the market may not share the same level of optimism for this development.
Despite Alibaba Chairman Joe Tsai’s attempt to appease investor disappointment by announcing that Alibaba will commence paying annual dividends, the stock plummeted by 9 percent in New York, erasing $20 billion from the company’s market value, and continued to slide during the next day’s trading in Hong Kong.
Ma’s move holds significance for two reasons. First, it suggests that key insiders in China lack confidence in the Chinese economy, despite Xi Jinping’s efforts to demonstrate improved relations between China and the U.S., aiming to brighten the investment prospect in China and stem capital flight from the country.
Earlier this year, SoftBank Group Corp., which once owned a third of Alibaba, sold a significant portion of its remaining shares. Warren Buffett’s Berkshire Hathaway sold 2.48 million shares in electric-vehicle maker BYD in March and Amsterdam-listed Prosus unveiled a plan to sell 96 million shares, valued at about $4.4 billion, of Tencent in January.
Individuals familiar with the Chinese entrepreneur circle have informed me that China’s wealthy entrepreneurs have also been on a fleeing spree, endeavoring to move their wealth out of China, even if it means incurring some losses.
Nevertheless, Ma’s move is significant not just due to its financial implications but also because of its timing. It serves as a political statement directly opposing Xi Jinping’s Asia-Pacific Economic Cooperation Summit objectives of instilling confidence in China’s economy.
The fact that Ma boldly made such a statement raises speculation that Xi’s authority might have been weakened or that there are political forces backing Ma’s actions. Recent developments suggest that China might be entering a period of political and economic instability.
Since the end of July this year, the top leadership of various military branches (Rocket Force, Navy, Air Force and possibly Equipment) of the People’s Liberation Army has been replaced. Xi also abruptly dismissed the minister of defense and minister of foreign policy in the same period without an explanation.
Coupled with the unexpected death of former Chinese Premier Li Keqiang, suspicions are heightened, creating an impression of significant turmoil within the top leadership of the Chinese Communist Party (CCP).
In addition to political uncertainties, China’s economy is seemingly beyond repair. Xi urgently needs to revive the economy and secure his rule with the help of America. The Biden administration also sees the need for stable relations with China, as confirmed by U.S. Commerce Secretary Gina Raimondo’s remarks that both the United States and China “are eager to stabilize bilateral relations.”
Perhaps from the Biden administration’s perspective, the U.S. is already stretched thin with two ongoing wars. America would not want to see a third conflict, especially one involving Taiwan, erupting right now. Furthermore, if the relationship between China and the U.S. continues to deteriorate, leading to economic decoupling, the market’s response could be disastrous, posing a challenge to Biden’s momentum for 2024.
President Biden walked a fine line in appeasing both groups of the American people. For those concerned about the CCP’s impact on American interests, Biden reaffirmed that America will not loosen high-tech export controls and investment restrictions. Additionally, he continued to refer to Xi Jinping as a “dictator.”
Reengaging with China risks compromising America’s long-term national interests for short-term gains. Merely restricting sensitive technology exports and investments in specific areas isn’t enough to prevent China from enhancing its overall economic capabilities, which will pose a potential threat to America’s national security.
For instance, China’s manufacturing capabilities have long surpassed America’s, and its shipbuilding capabilities are 232 times that of the U.S. In a war scenario, this discrepancy could be catastrophic.
History teaches us that whenever the CCP faces trouble, it extends an olive branch to the West. However, as soon as it grows stronger, it tends to move towards toppling the existing world order and removing America from world leadership. This pattern has been repeated in the past, and we should learn from it.
Hopefully, Jack Ma’s sale of Alibaba shares will prompt American political and business leaders to approach the situation with a greater degree of sobriety.
Simone Gao is a journalist and host of “Zooming In With Simone Gao,” an online current affairs program.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
"sold" - Google News
November 27, 2023
https://ift.tt/AaktK0y
Alibaba's founder sold massive shares. What does that mean for China? - The Hill
"sold" - Google News
https://ift.tt/ELWaubF
https://ift.tt/gLVTEHh
Bagikan Berita Ini
0 Response to "Alibaba's founder sold massive shares. What does that mean for China? - The Hill"
Post a Comment