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4 min read . Updated: 23 Aug 2021, 10:32 PM IST
China’s anticorruption watchdog is investigating top government officials in the eastern Chinese city of Hangzhou, where Alibaba Group Holding Ltd and Ant Group Co. are based, raising questions about close ties between local top-level Communist Party officials and the private sector.
On Monday, China’s Central Commission for Discipline Inspection republished a report by its Hangzhou branch describing problems related to cozy government-business relationships and saying it had ordered the city’s Communist Party members to resolve conflicts of interests involving themselves or family members within three months. Close to 25,000 party cadres had undergone self-examination, the statement added.
The announcement came two days after the disciplinary commission’s national-level body announced a probe into Zhou Jiangyong, Hangzhou’s top Communist Party official, citing suspected serious violations of discipline and law. While the antigraft agency didn’t provide further details, the language used implied a corruption case.
The CCDI didn’t immediately reply to an email request for comment. Mr. Zhou couldn’t be reached for comment.
Over the weekend, the probe into Mr. Zhou, 53 years old, quickly became one of the top-trending topics on China’s Twitter-like Weibo platform, attracting more than 820 million views from users.
On Sunday, Ant issued a statement saying it had abided by laws and regulations and dismissed speculations surrounding its initial public offering as false rumors.
Recent Chinese media reports had led to widespread speculation that the probe into Mr. Zhou was linked to the IPO of Ant, a financial affiliate of Alibaba. The Paper, a state-backed media outlet based in Shanghai, republished allegations from financial information provider Chnfund on Saturday that alleged Mr. Zhou’s family had bought up shares in a local technology company ahead of a planned IPO last year, without naming the company. Both articles later disappeared.
Caijing, an influential Chinese financial publication, also published a report on Sunday citing similar speculation from social-media accounts. Though Caijing said it couldn’t verify the allegations, it dedicated large sections of the article to Mr. Zhou’s ties to Alibaba and recent probes into local Communist Party officials and their links to Ant.
In November, Beijing called a sudden halt to Ant’s blockbuster IPO—which had been on track to raise at least $34 billion—after Jack Ma, the billionaire founder of Alibaba and controlling shareholder of financial affiliate Ant Group, publicly criticized China’s financial regulators.
Before Mr. Zhou, two top officials in Zhejiang have come under investigation for corruption in recent months, according to announcements from local antigraft agencies last week and in June.
Ant didn’t respond to a request for further comment.
Alibaba’s Hong Kong-listed shares fell 3.7% on Monday, falling for a ninth straight trading day. The latest drop contrasted with a rise in the broader market on Monday, including small increases in the shares of Chinese internet giants Tencent Holdings Ltd., Meituan and JD.Com Inc.
Alibaba’s share price has fallen by about one-third since the start of the year and now sits at its lowest level in more than a year, with a market capitalization of roughly $425 billion, according to FactSet.
Mr. Zhou, who began his career as a high-school teacher, rose through the party ranks of Zhejiang province, a wealthy coastal province near Shanghai, and was a vocal advocate for developing the digital sector.
Mr. Zhou bestowed Mr. Ma with an honorary medal for his service to the city at a September 2019 ceremony at which Mr. Ma was quoted saying: “The Hangzhou government and Alibaba represent a brand new relationship between government and enterprise, a kind of family relationship."
Days later, Alibaba and Hangzhou’s municipal government signed an agreement to comprehensively deepen strategic cooperation, according to an announcement that has since disappeared from the Hangzhou government’s website.
Alibaba didn’t immediately respond to a request for comment.
Hangzhou has emerged as one of the wealthiest cities in China in recent years, thanks in large part to Alibaba and Ant. The per capita disposable income of Hangzhou’s 12 million residents was the equivalent of more than $9,500 last year, roughly double the national average.
Alibaba and Ant are two of the city’s largest employers and have spawned a cottage industry of merchants and technology companies seeking to do business with Mr. Ma’s e-commerce and financial technology empire.
However, the fortunes of Mr. Ma’s companies have taken a turn since Ant’s IPO was halted. In March, Alibaba was asked to shed its media assets. In April, Beijing ordered Ant to restructure itself and allow for more government supervision, while Alibaba was fined a record $2.8 billion for antitrust violations.
This story has been published from a wire agency feed without modifications to the text
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