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Britain introduces a wage-support program for shorter hours.

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Treasury Secretary Steven Mnuchin said he and House Speaker Nancy Pelosi agreed to resume talks, but the ability to reach a deal remains unclear.
Credit…Pool photo by Drew Angerer

Treasury Secretary Steven Mnuchin said on Thursday that he and Speaker Nancy Pelosi agreed to resume talks on another economic relief package amid concerns that the recovery will soon sputter without additional fiscal support.

“I’ve probably spoken to Speaker Pelosi 15 or 20 times in the last few days on the CR,” Mnuchin told the Senate Banking Committee, referring to a continuing resolution to extend government funding, “and we’ve agreed to continue to have discussions about the CARES Act.”

The comments, made at a Senate Banking Committee hearing, came as jobless claims rose to 825,000 last week and as stock markets remained volatile.

Yet the ability to reach a deal remains unclear. At the hearing, Mr. Mnuchin was critical of Democrats for making negotiations conditional on an agreement for a broad package that would cost more than $2 trillion and said he hoped that Republicans and Democrats could pass targeted legislation on the items where they agree.

“I think that would be very meaningful for the economy broadly,” Mr. Mnuchin said, referring to a relief bill that was focused on helping children return to school safely and supporting small businesses.

Ms. Pelosi said on Thursday that she expected to return to the negotiating table with Mr. Mnuchin “hopefully soon.”

“I’m talking with my caucus, my leadership, and we’ll see what we’re going to do,” she told reporters ahead of a meeting with her top deputies. “But we’re ready for a negotiation. That’s what we’re ready for.”

Top Democrats on Thursday were crafting a $2.4 trillion package — about $1 trillion less than the measure the House approved in May — that could either serve as a new basis for the Democratic position in negotiations or be voted on as a stand-alone package in the coming days, according to a senior Democratic aide.

Moderate Democrats have grown increasingly vocal in recent days about their concerns, with some contemplating signing on to a Republican discharge petition that would force a vote on legislation reviving the Paycheck Protection Program, which provides loans to small businesses.

About $130 billion in the paycheck program remains unused and the deadline to apply for loans expired on Aug. 8. Businesses that received a loan were not eligible to go back for a second round of funding.

Mr. Mnuchin called on Congress to give him the authority to use that money to issue second loans to businesses that have been hardest hit by the pandemic. He also suggested that Congress could offer quick assistance at no extra cost by giving him the authority to use money that was allocated for backstopping Federal Reserve lending facilities for other purposes.

  • Wall Street couldn’t shake off its unease about the economy, and an afternoon rally faded before trading ended on Thursday. After starting the day with a loss and then climbing more than 1 percent, the S&P 500 was slightly higher by the close of trading.

  • The middle-of-the-day gains had come after Treasury Secretary Steven Mnuchin told the Senate Banking Committee that he and House Speaker Nancy Pelosi had agreed to restart talks about another economic aid package. Ms. Pelosi also said on Thursday that she expected to return to the negotiating table.

  • But a lack of progress between Republicans and Democrats on new fiscal spending over the pandemic — despite many economists’ warnings that the United States’ economy won’t hold up without it — has become a key concern for investors this month.

  • Speaking at the same Senate hearing as Mr. Mnuchin on Thursday, the Federal Reserve chair, Jerome H. Powell, said that government spending so far should be credited for the pace of rebound, but risks loom if key programs are allowed to lapse. As unemployed workers run through their savings, they might pull back on spending and lose their houses or apartments, he said.

  • Without more help, “we’ll see sooner or later, probably sooner, that the economy has a hard time sustaining the growth that we’ve seen — that’s the risk,” Mr. Powell said.

  • Concerns about Washington’s inability to reach an agreement on that aid intensified this week after attention shifted to the fight over filling Justice Ruth Bader Ginsburg’s seat on the Supreme Court before November’s election.

  • As a result, the S&P 500 had fallen 9.6 percent through Wednesday from its Sept. 2 record. A drop of more than 10 percent is called a correction on Wall Street, and is taken as a signal that a long-term sell-off could be underway.

  • Stocks in Europe and Asia were lower Thursday. The benchmark Stoxx Europe 600 index and the FTSE 100 in Britain were both more than 1 percent lower. The major indexes for Japan, Hong Kong and South Korea closed between 1 percent and 2.6 percent lower.

  • On Thursday, investors were also considering new data on unemployment claims in the United States, which showed that applications for jobless benefits rose to 825,000 last week.

    Jeanna Smialek contributed reporting.

Lacy Kowalkowski sanitizing a table at Pinewood Social in Nashville. Restaurants are predicting more layoffs as outdoor dining declines with the arrival of cooler weather.
Credit…William DeShazer for The New York Times

Applications for jobless benefits rose last week as employers continued to lay off workers six months after the coronavirus pandemic first rocked the U.S. economy.

About 825,000 Americans filed for state unemployment benefits last week, the Labor Department said Thursday. That is up from 796,000 a week earlier, though it is far below the more than six million people a week who were filing for benefits during the peak period of layoffs in the spring. Those numbers do not reflect adjustments for seasonal fluctuations.

On an adjusted basis, last week’s total was 870,000, up from 866,000 the previous week.

In addition, 630,000 initial filings were recorded for Pandemic Unemployment Assistance, an emergency federal program that covers freelancers, self-employed workers and others left out of the regular unemployment system. That program has been plagued by fraud and double-counting, and many economists say the data is unreliable.

By any measure, however, hundreds of thousands of Americans are losing their jobs each week, and millions more laid off earlier in the crisis are still relying on unemployed benefits to meet their basic expenses. Applications for benefits remain higher than at the peak of many past recessions, and after falling quickly in the spring, the number has declined only slowly in recent weeks.

“Compared to April, they’re trending down, but if you’re comparing to the pre-Covid era they are still so high,” said AnnElizabeth Konkel, an economist for the career site Indeed.

The recent letup in progress is particularly worrisome, Ms. Konkel said, because warm weather has allowed many businesses to shift operations outdoors. As colder weather hits Northern states in the weeks ahead, restaurants and other businesses are likely to begin laying off workers again.

“We’re losing steam, which is definitely not good heading into the winter,” she said.

The report on Thursday marked 27 weeks since the flood of layoffs began in mid-March. In most states, workers qualify for a maximum of 26 weeks of unemployment payments, meaning that workers who lost their jobs early in the crisis have begun to see their benefits expire.

An emergency program established by Congress in March offers an additional 13 weeks of benefits for most workers. And a separate federal program will provide extended benefits after that if the unemployment rate remains elevated. But experts on the unemployment system said there was a risk that benefits for some workers would lapse at least temporarily.

Applications for benefits under the Pandemic Unemployment Assistance program fell last week. But that may reflect efforts to control fraud in the program, rather than a true decline in the number of people who need help.

The program, created by Congress in March, is meant to cover freelancers, self-employed workers, part-timers and others who don’t ordinarily qualify for regular state jobless benefits. After a slow start, the program has grown rapidly and now provides aid to millions of workers.

But it has been plagued by fraud, delays and double-counting, making it hard for states to process applications and for economists to understand how many people are receiving benefits. In recent weeks, California and Arizona in particular have reported a flood of fraudulent claims. On Saturday, California announced it would stop accepting applications for unemployment benefits for two weeks while it took steps to cut down on fraud and address other issues.

Data released by the Labor Department on Thursday suggests that even before that shutdown, California had begun to get its fraud problem under control. The state reported just under 100,000 applications under the program last week, down from more than 200,000 the week before, and more than 400,000 per week in late August and early September.

Arizona, however, reported more than 200,000 applications for pandemic benefits last week, up from 165,000 the week before, suggesting that fraud remains a problem there.

Nationally, applications fell to 630,000 from 675,000. Without the big drop in California, however, they would have risen by nearly 60,000.

Stephanie Santiful, whose California unemployment benefits expired, is eligible for federal relief but doesn’t know when the state will let her apply for it.
Credit…Alexis Hunley for The New York Times

After months of delays in unemployment payments — and weeks of rapidly rising jobless claims that officials attribute at least partly to fraud — California pulled the plug last week. On Saturday, the state’s employment office announced that it would stop processing new filings for two weeks.

State officials say the “reset” will allow California to address a backlog of nearly 600,000 claims, and to create systems to process filings and weed out fraud more quickly. They say the roughly five million workers already receiving benefits will not be affected.

But for Californians like Stephanie Santiful, the shutdown is a source of frustration and uncertainty.

Ms. Santiful, 37, lost her job as a university librarian in March. After a few weeks, she began receiving $450 a week in state unemployment benefits, plus a $600 supplement from the federal government while that program lasted. It was a bit less than what she had earned while working, but enough to pay her bills.

The supplement expired at the end of July, and last week she reached the end of her regular state benefits. Ms. Santiful should qualify for an additional 13 weeks of benefits under an emergency program created by Congress in March, but she has to apply for them first — and with California’s application system on hold, it isn’t clear whether she will be able to do so.

She also has yet to receive the $300 a week in extra benefits that President Trump authorized last month, and doesn’t know when she will get it.

“It’s scary,” Ms. Santiful, who lives in Lancaster, said. “It’s scary to not know what to expect. It’s scary not knowing if the country decides, ‘OK, that’s been enough, you’re on your own.’”

Ms. Santiful, who has two teenage sons, said she had saved enough to cover rent for October. But after that, she isn’t sure what she’ll do. She said she was considering returning to Virginia, her home state, but doesn’t know how she would afford that.

“I can’t even move back home because I don’t have the money,” she said.

Target will increase the number of workers dedicated to in-store and curbside pickup services this holiday season.
Credit…Joe Raedle/Getty Images

Target said on Thursday that it planned to double the number of store employees dedicated to in-store and curbside pickup services this holiday season and train additional staff to help in those areas, as the pandemic alters consumer shopping habits.

The retailer, which has more than 1,800 stores and 43 distribution centers, said that employees would also pack online orders that ship to homes from stores, and that it planned to hire more full-time and seasonal staff in warehouses. Target also said that it would dedicate employees to the front of its stores, where they will be responsible for safety precautions like cleaning and disinfecting carts and providing masks to shoppers.

“During the first half of 2020, demand for contactless fulfillment options quadrupled and we anticipate continued guest interest in these same-day services,” Melissa Kremer, Target’s chief human resources officer, said Thursday in a call with reporters.

Retailers are gearing up for a radically different holiday shopping season this year as the coronavirus crisis persists across the United States. They are planning to offer Black Friday deals as early as October and are realigning store staffing to cater to customers who are not comfortable browsing in stores or standing in crowded lines.

Target is among the big-box retailers and grocers that have emerged as initial winners during the pandemic, which has sent many clothing chains and mall stalwarts spiraling. Target reported a 25 percent increase in revenue to about $23 billion for its latest quarter, which ended Aug. 1, including its biggest-ever percentage increase in quarterly comparable sales.

The retailer said it planned to offer more hours to existing staff, especially with the new training in areas like fulfillment and same-day pickup, but it still expects its seasonal hiring to be on par with last year, when it hired roughly 130,000 people.

“We do expect this to be a very different holiday season,” Brian Cornell, Target’s chief executive, said on the call. “We’re not expecting long lines on Black Friday morning but we certainly expect a very engaged consumer and Target guest who’s looking forward to celebrating the holiday season.”

  • Patagonia said on Thursday that it named Ryan Gellert as its new chief executive. Mr. Gellert, who has overseen Patagonia’s business in Europe, the Middle East and Africa since 2014, replaces Rose Marcario, who abruptly stepped down in June after 12 years at the company.

  • TheTurkish Central Bank on Thursday unexpectedly raised its benchmark rate to 10.25 percent from 8.25 percent in an attempt to stem the decline in the value of the lira. The Turkish currency gained ground after the move, trading at around 7.6 to the U.S. dollar. But that is still a steep decline from the beginning of August when the lira was worth 7 to the dollar. The deteriorating currency fuels domestic inflation and threatens Turkish businesses which have debts that must be repaid in dollars.

  • Sephora is working with Instacart to offer same-day delivery of beauty products to customers, according to an announcement on Thursday, in another example of retail changes wrought by the pandemic. The offering, which will get Sephora products to Instacart users in as little as an hour, will start at certain California stores and expand to more than 400 locations in coming weeks, according to Sephora.

  • The E.W. Scripps Company said on Thursday that it would buy ION Media for $2.65 billion, combining the business with Scripps’ Katz networks and Newsy to create a national news network. ION, which operates a national television network featuring crime and justice shows, has the fifth-largest average prime-time audience among all cable networks and owns television stations in 62 markets, reaching 96 percent of U.S. homes, according to a news release.

  • Harley-Davidson announced additional restructuring moves on Thursday in a regulatory filing, which include discontinuing its sales and manufacturing operations in India and laying off 70 employees there. The motorcycle maker had previously disclosed its restructuring plan — a process it is calling “The Rewire” — that was approved through Aug. 5. The company says it expects the new restructuring activities to be completed within the next 12 months, and that more restructuring changes are likely to come.

The Miami Herald said it would no longer publish Libre, a paid advertising supplement in El Nuevo Herald, a sibling publication.
Credit…Wilfredo Lee/Associated Press

A top editor of The Miami Herald’s Spanish-language sister publication, El Nuevo Herald, has resigned and its publisher has been demoted after a racist and anti-Semitic column was published in a paid insert inside the newspaper this month.

Kristin Roberts, vice president of news at McClatchy, which publishes The Herald and El Nuevo Herald, announced the leadership shake-up on Thursday in an email to staff, which The New York Times obtained.

Ms. Roberts said Nancy San Martin, El Nuevo Herald’s managing editor, had resigned.

Aminda Marqués González, the executive editor and publisher of The Herald and El Nuevo Herald, will no longer be publisher, a job she had held since April 2019, but will remain executive editor.

The column was published on Sept. 11 in Libre, a Friday supplement in El Nuevo Herald. The author, Roberto Luque-Escalona, took aim at American Jews who support Black Lives Matter.

“What kind of people are these Jews?” Mr. Luque-Escalona wrote. “They are always talking about the Holocaust, but have they now forgotten Kristallnacht, when Nazi thugs razed Jewish businesses throughout Germany? The same is being done by B.L.M. and Antifa, only the Nazis did not rob; they only destroyed.”

Ms. San Martin and Ms. Marqués apologized to readers several days after the column was published, saying: “The fact that no one in leadership, beginning with us, had previously read this advertising insert until this issue was surfaced by a reader is distressing.”

In a statement last week, McClatchy said an internal review had resulted in a termination of the company’s commercial relationship with Libre.

Rishi Sunak, the chancellor of the Exchequer, announced a program in which the government and employers will share the cost of the wages for workers on shorter hours.
Credit…Jessica Taylor/Agence France-Presse, via Uk Parliament/Afp Via Getty Images

Rishi Sunak, Britain’s top financial official, on Thursday announced a range of new and extended measures to protect jobs and help businesses, including another government wage-paying program, just days after the prime minister, Boris Johnson, set new social restrictions to curtail the spread of the coronavirus that he warned could last for months.

The Treasury had been under increasing pressure to announce a successor to a furlough program that has supported the wages of as many as 9.6 million workers at a cost of 39.3 billion pounds, or $50.1 billion. The program is set to end Oct. 31, and Britain’s statistics agency said about 11 percent of the work force was still using it.

It will be replaced by a program in which the government and employers will share the cost of the wages for workers on shorter hours, similar to Germany’s Kurzarbeit, or short-work program.

“It is now clear, as the prime minister and our scientific advisers have said, for at least the next six months, the virus and restrictions are going to be a fact of our lives,” Mr. Sunak, the chancellor of the Exchequer, told the House of Commons.

On the decision to end the furlough program, he said that “it is fundamentally wrong to hold people in jobs that only exist inside the furlough” and that the new program would keep people in jobs that provided “genuine security.”

Late on Wednesday, the Treasury said it would scrap the introduction of a budget in November, which would have offered a long-term plan for the economic recovery. Instead it announced the short-term measures introduced by Mr. Sunak on Thursday. Among the details:

  • A new wage-support program for workers whose hours have been reduced. Under the plan, employees must work at least a third of their normal hours, and the company will pay these wages. For the lost hours, the company will pay a third of the wages, the government will pay another third and the employee will forgo the last portion. The program will run from Nov. 1 for six months.

  • The government extended the reduction in VAT, a type of sales tax, for the hospitality and tourism industries, until the end of March.

  • The Treasury will also extend four business loan programs that are backed by the government, and allow companies to lengthen the time they need to repay these loans.

A passenger checks in for a flight at San Francisco International Airport.
Credit…Justin Sullivan/Getty Images

United Airlines, in coordination with officials in Hawaii, will allow passengers flying to that state from San Francisco to skip the state’s 14-day quarantine requirement if they test negative for the coronavirus before departure.

Hawaii said last week that it would allow all visitors to test out of its quarantine requirement. United is the first of the four large U.S. airlines to arrange testing for its customers.

The tests will be available as part of a pilot program that starts on Oct. 15, the day that the new policy goes into effect.

Passengers who choose to be tested will have two options: they can take a rapid test at the airport before their flight, receiving results in about 15 minutes; or they can chose a swab test they would have to administer to themselves at home a few days before their departures. The rapid test is expected to cost about $250 and the at-home test is expected to cost about $80. Customers who test positive will be allowed to reschedule their flights.

Janet Lamkin, United’s president for California, said the airline had been developing the program for three to four months, working closely with Hawaiian officials to ensure that the pilot program met the state’s requirements and freed passengers from the its quarantine.

United, which is second only to Hawaiian Airlines in the number of passengers it flies to the state, operates daily flights from San Francisco to Honolulu, Maui and Kona. On Oct. 15, it plans to resume service to Lihue and add more flights to Maui and Kona. Hawaii has been successful in limiting the spread of the coronavirus in recent days and has seen fewer total cases than all but a handful of other states.

The rapid test, which United has already been using with employees, will be administered at San Francisco International Airport before security. The at-home test will be mailed to passengers. If successful, United hopes to expand the pilot program to include other destinations and airports.

In Munich, Germany, on Tuesday.  Economists say a resurgence of coronavirus infections will slow the rebound of businesses.  
Credit…Philipp Guelland/EPA, via Shutterstock

The outlook for German growth continued to improve in September, according to a survey of business managers that has a good track record of predicting the direction of Europe’s largest economy.

The survey of business expectations by the Ifo Institute in Munich, probably Germany’s most closely watched economic indicator, rose for the fifth month in a row.

But economists say the rebound in Germany and the rest of the eurozone is likely to slow in coming months because of a resurgence of the coronavirus.

The bloc is entering a “tricky transition period” as government stimulus programs start to run their course, said Marion Amiot, senior economist at S&P Global Ratings. “The reopening of economies was the easiest part of the recovery,” she said in a note.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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