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The week in review: Beijing slaps record antitrust fine on Alibaba, regulators open up Hainan’s financial sector

Alibaba_adobe_575px_12Apr21
By Addison Gong
12 Apr 2021

In this round-up, China’s top antitrust watchdog fines Alibaba Group Holding a record Rmb18.23bn ($2.78bn) for monopolistic practices, and regulators announce measures to develop and open the financial services sector in the Hainan Free Trade Port.

The State Administration for Market Regulation (Samr) has fined Chinese technology giant Alibaba Rmb18.23bn, following an antitrust probe into the company at the end of 2020.

The amount equals 4% of Alibaba’s domestic revenues in 2019. While still within the 10% maximum permitted for anti-monopoly violations, the fine is the largest seen in China since the Rmb6.088bn penalty Qualcomm paid in 2015, public records show.

According to Samr, Alibaba has “abused its market dominance position” since 2015, preventing merchants from using other online shopping platforms. It designed a mixture of rewards and penalties using its “market position, platform rules, data, algorithms and other technical methods” and forced its merchants to “choose one of two platforms”, and “gained an unfair competitive advantage”, the anti-monopoly regulator said in a Saturday announcement.

In addition to the fine, Samr has ordered Alibaba to fully rectify its behaviour, strengthen internal control and compliance, ensure fair competition and protect the rights of its merchants and consumer rights, and submit self-assessed compliance reports for three years.

In a statement issued on Saturday, Alibaba said it “sincerely accepted” Samr’s punishments and will “resolutely” follow them. It pledged to continue coming up with measures to “create a platform environment that is more open, fairer” and “more efficient” for its merchants and partners.

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The People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange have jointly published a notice for the finance industry to support the development of the Hainan Free Trade Port (FTP).

These included measures to increase renminbi convertibility. Foreign investors are being encouraged to invest in asset management products from financial institutions in Hainan, and non-Chinese individuals will be supported to invest in the onshore market, including in the securities market. Qualified non-bank institutions will be allowed to participate in the interbank foreign exchange market. Regulators will launch a Qualified Foreign Limited Partners (QFLP) trial programme in the FTP and allow them to remit funds more easily, they said last Friday.

To help Hainan’s financial market development, the regulators are encouraging national joint-stock commercial banks to set up branches in Hainan, and for foreign capital to invest in local asset management companies. Qualified Hainan-based companies are being encouraged to conduct IPOs and M&As, and issue bonds both in the interbank and exchange markets as well as offshore renminbi bonds.

Regulators also plan to open up the local financial services sector. Foreign financial institutions are being welcomed to set up joint venture banks in Hainan, or to become strategic investors in local lenders. Foreign institutions can apply in Hainan for payment licences, while Chinese banks with an established offshore business will be allowed to conduct offshore banking services through their branches in the FTP. The government has also pledged faster approval process for foreign market access in the banking sector.

Other measures announced by the regulators include making cross-border mobile payments easier, and encouraging the development of green finance, financial technology, and real estate investment trusts. Regulators also stressed the control and prevention of financial risks, and protection of consumer rights, when developing the financial industry locally.

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Close to 2.48m new investors entered the domestic market in March, taking the onshore total to nearly 184m — 12.6% higher than a year ago, according to the China Securities Depository and Clearing Corp (CSDC). The CSDC provides securities depository and clearing services for the stock exchanges in Shanghai and Shenzhen.

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The Shanghai Stock Exchange held a meeting with 23 IPO sponsors on Friday about developing the Star market. The sponsors were told to double-check whether the IPO candidates meet with Star board’s technology requirements to list, focus on working with “hard technology” companies and help them go public, improve information disclosure standards, and strengthen internal controls.

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The PBoC governor Yi Gang said promoting green finance is key to the central bank’s work, and that Beijing supports the International Monetary Fund to incorporate climate change in its global policy agenda, according to a statement on the PBoC website. His comments came at the 43rd meeting of the IMF and Financial Committee held last week.

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China should establish a self-regulating mechanism for green bond certification institutions, Ma Jun, director of the Institute of Finance and Sustainability, said at a forum in Beijing on Saturday.

Institutions must have the relevant experiences and qualifications before they are allowed to certify green bonds, and there should be unified requirements for the quality and standards for such certifications, Ma said, adding that measures should be taken to prevent a price war.

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Bank of Jiangsu has published a ‘carbon neutrality action plan’, pledging to provide at least Rmb200m in climate-related funding support and Rmb50bn of financing to the clean energy industry, between 2021 and 2025. It aims to help reduce carbon dioxide emissions by at least 10m tonnes during the period.

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Car sales in China jumped 74.9% in March to 2.526m vehicles, according to the Ministry of Industry and Information Technology. Sales of new energy cars were up 240% to 226,000 vehicles. 

By Addison Gong
12 Apr 2021