The FT writes that Alibaba investors should be wary of China’s enthusiasm for the digital renminbi. This central bank digital currency poses a threat to Alipay, the payments business of Alibaba affiliate Ant Group. Groups such as Alipay risk becoming providers of plumbing in a government-controlled financial system.
But there is also reason to be cautious. The plan makes the city of Hangzhou the second-biggest shareholder of the key Ant unit. Consumer financial data, which gives Ant an edge, may find its way to the government more easily. The consumer business may be regulated strictly as a state-owned, traditional lender, as opposed to a tech group. Investors should recall the original reason for the crackdown on Ant. Beijing wanted to curb the power of tech platforms, especially in digital payments. Alipay, Ant Group’s wholly owned payments service, operates China’s biggest payments network.