Irish Times on Jack Ma, Yu'e Bao
The Irish Times wrote recently, in a piece titled, "Jack Ma vs Xi Jinping: the future of private business in China," that, "Four years ago, when Ant Group's premier money market fund was racing to a peak of more than $260 billion (€213.5 billion) worth of assets under management, many of China's state-owned banks and their regulators started to get agitated. In a series of calls and meetings with Jack Ma, Ant's founder, bank executives and regulatory officials demanded that its Yu'E Bao fund be reined in. 'Yu'E Bao was pulling a lot of money from the banks,' says one person familiar with the discussions. 'The banks were worried about the impact on liquidity and wanted Ant to take measures to minimise the impact. The conversations were pretty tense.'" They explain, "In the end, Mr Ma had to back down and Yu'E Bao imposed caps on how much people could deposit. Between March and December of 2018, its funds under management fell by a third to $168 billion and stood at $183 billion last September. The showdown would prove to be a prelude to the much bigger confrontation that now pits the Chinese Communist party and President Xi Jinping against not just Ant but also Alibaba, the ecommerce group founded by Mr Ma." The Irish Times adds, "Yu'E Bao, which translates as 'account balance treasure', was started in 2013 and allowed anyone in China, from restaurant staff to the urban yuppies they serve, to deposit as little as Rmb1 (13 cent) in a money-market fund and earn more interest than they could in a Chinese savings deposit account. Just four years later it became the world's largest money market fund, surpassing JPMorgan's US government money market fund. The fund’s success was a dramatic demonstration of Ant's potential. But it was also a threat to one of China's most powerful vested interest groups -- state banks and the officials who regulate them. The central bank was also concerned. In its annual financial stability report published in late 2019, the PBoC said it would 'strengthen regulation of systematically important money market funds', without mentioning Yu'E Bao by name. 'When a taxi driver can deposit one renminbi in a money-market fund and get interest, that's a big breakthrough,' says a former Alibaba executive. 'Jack feels what Ant is doing is good for society.'" See also the article, "Breakingviews - Chinese monopoly rules threaten super-app model."
