Leading Chinese bizman Jack Ma's ANT Group disburses $230 bn in loans challenging CCP-controlled banking

Beijing: – The Chinese banking sector is rocked because of the activities of the companies of Chinese billionaire Jack Ma. It has been exposed that more than USD 230 billion have been distributed in loans through the ANT Group, one of the leading e-commerce and financial technology companies. Distribution of loans is primarily a banking function, and therefore, the loan distribution by the ANT Group is considered to be a challenge to the traditional Chinese banking industry. Talks have also started that the action of the Jack Ma company is antagonising the operating methodology of the Chinese government, which dominates and controls the Chinese banking sector.

The report published by the ANT Group claims that nearly 500 million people in China have been given short term loans over the last year. The loans not repaid form almost 20% of the total short-term loans disbursed by the ANT Group. There are 100 small and large banks making these loans available. As per information, the banks may have decided to disburse the loans through the medium of the ANT Group as the number of borrowers was increasing easily. While the loans were being disbursed on one side, Jack Ma, the Chief of ANT Group, made a statement criticising the functioning of the large banks and the banking monitoring systems. He claimed that the banks and the concerned agencies are not willing to accept innovations and are unwilling to take risks. This statement of Ma badly hurt the communist regime along with the banking sector. The ANT Group had to pay the price for it. The company had to withdraw its IPO from the Hong Kong and Shanghai stock exchanges.

This development brings the tension between the government and private businesses in China on the anvil. At the same time, discussions have started about the collapse of the Chinese banking sector. Five large government companies in China have declared that they are unable to service the debts. The government has refused to bail these companies out through funding. The Chinese Central Bank also has given clear indications that small and medium banks and local administrations will not be getting any bailout packages. The instructions coming during this time of Coronavirus crisis, when there is a possibility of bad debts increasing substantially, becomes significant.

International Monetary Fund and the World Bank has repeatedly warned regarding the Chinese banking sector and the increasing debt burden. It has also been warned that if this is ignored, it can hit the global economy. China has also been advised to implement economic reforms to resolve the debt crisis in the banking sector. But with this ANT Group issue, it is clear that the Chinese government and the concerned agencies are still not willing to implement reforms. Therefore, there is a possibility of these problems reflecting in the global economy along with China. These developments in China at a time when the global economy is under the shadows of an impending recession due to the Coronavirus crisis increases concerns.