Beijing sees Ant as partial antidote to US antagonism

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An old adversary always seems nicer if they might be able to help you out. China may therefore be rescinding Ant Group’s maverick status. The proof is that Beijing has approved the public rollout of products powered by generative AI created by Ant, the fintech affiliate of ecommerce giant Alibaba.

Ant’s wilderness years began in 2020 when Alibaba founder Jack Ma publicly criticised officialdom. Ever-tightening US curbs on exports of advanced technology now threaten Beijing’s ambitions in artificial intelligence. It needs innovative local groups like Ant to lead the charge. That gives the business a chance to make a comeback.

Ant has developed applications powered by Bailing, its large language model. One chatbot answers questions for customers and another assists financial professionals. That is characteristic of the disruptive company that reinvented banking in China. Ant runs the country’s biggest mobile payment system and one of the top online insurance and wealth management platforms.

The 2020 crackdown forced Ant to postpone its initial public offering. Beijing’s ire reflected the jealousy of the country’s stolid state-owned lenders. However, private sector companies such as Ant are far more likely to train up an army of AI experts than they are.

Local lenders are preoccupied with the credit losses they are expected to shoulder from the property crisis. Deep cost-cutting is needed. AI-powered solutions could help with everything from marketing and investment advisory to anti-money laundering compliance. Globally, savings from generative AI for the banking sector are forecast to reach $340bn a year.

Shares of Alibaba, which has a stake of about a third in Ant, have dropped 28 per cent from a January peak. They trade at about 10 times forward earnings, less than a fifth of the level before the crackdown.

This year, Ant was fined almost $1bn by financial regulators. That marked a low point for the company and Alibaba. But if Beijing is letting bygones be bygones, 2023 could signal a turning point for both businesses.