Monday, September 13, 2021

China Plans to Split Alipay and Create a Separate Lending Application

Beijing continues its siege of the country's technology sector. Xi Jinping's executive intends to split Alipay, the popular payment app owned by Ant Group, a subsidiary of e-commerce giant Alibaba. 

The aim of the plan would be for the firm owned by billionaire Jack Ma to hand over the user data on which its lending decisions are based to a new credit rating joint venture in which the Chinese state will have a stake.

As advanced by the 'Financial Times', the purpose of this split is to establish a credit rating company in which Ant and Zhejiang Tourism Investment Group Co Ltd will each hold 35% of the capital, while other state-backed partners, Hangzhou Finance and Investment Group and Zhejiang Electronic Port, will each hold just over 5%, according to sources consulted by the newspaper.

According to the report made public by the British newspaper, Ant will not be the only online lender in China affected by the new rules. Last April, Chinese regulators asked Ant to carry out a radical change in its business, including turning Ant itself into a financial holding company and integrating its micro-lending businesses, Jiebei and Huabei, into a new consumer finance company.

Alibaba shares fell more than 5.1% on the Hong Kong Stock Exchange after this information was made public. Meanwhile, shares of Tencent, another of the sector's giants under government scrutiny, fell 2.9%. Chinese regulators have targeted Ant Group and other Internet giants in a wide-ranging campaign ranging from antitrust and privacy issues to user data and cryptocurrencies.

Last August the Chinese government announced new rules against 'unfair' competition on the Internet, which include a wide range of prohibitions on how companies can use data.

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