Vogue’s September issue was different this year. Anna Wintour and her staff put it together when more than 15 million people were marching in Black Lives Matter protests nationwide and employees at Vogue’s parent company, Condé Nast, were publicly calling out what they viewed as racism in their own workplace. At 316 pages, the issue, titled “Hope,” featured a majority of Black artists, models and photographers, a first for the magazine.
For members of Vogue’s editorial team, the September edition came in the uneasy wake of an internal email Ms. Wintour had sent on June 4. “I want to say plainly that I know Vogue has not found enough ways to elevate and give space to Black editors, writers, photographers, designers and other creators,” wrote Ms. Wintour, the Vogue editor in chief since 1988 and Condé Nast’s artistic director since 2013, making her the editorial leader of all its titles. “We have made mistakes, too, publishing images or stories that have been hurtful or intolerant. I take full responsibility for those mistakes.”
Black editors who have worked with Ms. Wintour said they saw her apology as hypocritical, part of a calculated play by an executive known for her ability to gauge the public mood. Other Black journalists who are current or former employees of Condé Nast said the email and the September issue that followed it represented an awkward, though heartfelt, attempt at genuine change.
More than any other institution, Vogue has defined fashion and beauty for generations of women, and the runway looks encouraged by the London-born Ms. Wintour, 70, have trickled down from haute couture houses to fast-fashion retailers and into the hands of everyday consumers. From Manhattan to Hollywood and beyond, she has helped set a standard that has favored white, Eurocentric notions of beauty.
The rare magazine editor who is known outside the publishing industry, Ms. Wintour — she is simply “Anna” to those in the know, or those who want to be — has become a singular cultural figure. After establishing herself in fashion, media and entertainment in the first part of a career that stretches to the 1970s, she has more recently become a political power player as a bundler for Hillary Clinton and Barack Obama. And as the orchestrator of the Metropolitan Museum of Art Costume Institute benefit, better known as the Met Gala, she has transformed an affair for Manhattan’s society set into a full-blown East Coast Oscars, with luminaries from fashion, music, movies and sports on the Anna-controlled guest list.
As Ms. Wintour ascended, Vogue’s publication of “hurtful or intolerant” content rarely resulted in lasting negative attention for her. But Black journalists who have worked with Ms. Wintour, speaking on the condition of anonymity out of fear of retribution, said they had not gotten over their experiences at a magazine whose workplace mirrored its exclusive pages.
Under Ms. Wintour, 18 people said, Vogue welcomed a certain type of employee — someone who is thin and white, typically from a wealthy family and educated at elite schools. Of the 18, 11 people said that, in their view, Ms. Wintour should no longer be in charge of Vogue and should give up her post as Condé Nast’s editorial leader.
“Fashion is bitchy,” one former Black staff member said. “It’s hard. This is the way it’s supposed to be. But at Vogue, when we’d evaluate a shoot or a look, we’d say ‘That’s Vogue,’ or, ‘That’s not Vogue,’ and what that really meant was ‘thin, rich and white.’ How do you work in that environment?”
Many of the people interviewed for this article said the racism they encountered was usually subtle, but sometimes blunt. Their main accusation was that Ms. Wintour created a work environment — and there is no facet of Vogue that she does not control — that sidelined and tokenized women of color, especially Black women.
Many Black people who worked for her said they felt so out of place in Ms. Wintour’s domain that they created white alter egos — two used the term “doppelgänger” — just to get through the workday, reconditioning their presentation and dress in a way that was mentally draining.
Some Black editors did not want to comment on the experience of fellow colleagues, but offered another view. Lindsay Peoples Wagner, the editor of Teen Vogue since 2018, said she has experienced uncomfortable moments in the industry but Ms. Wintour “has given me opportunities in leadership, and I’ve made inclusivity a deep part of the conversations we’re having.”
Three other people of color said Condé Nast had made positive changes, and Ms. Wintour has promoted them to top roles. Naomi Campbell, one of the first Black supermodels, who was on the cover of Ms. Wintour’s first September issue in 1989, vehemently defended the editor.
“The first cover try I ever did, I had no idea she had to fight for me,” Ms. Campbell said. “She’s been a very important factor in my career and my life and has been honest about what she can do and what she cannot.”
The recent tumult at Condé Nast has knocked Ms. Wintour off balance. Inspired by the protests that arose after the police killing of George Floyd in May, employees have confronted their bosses at companywide meetings and in smaller gatherings. Their complaints have led to the resignations of key editors and pledges from the chief executive, Roger Lynch, and Ms. Wintour herself, to revamp Condé Nast’s hiring practices.
“I strongly believe that the most important thing any of us can do in our work is to provide opportunities for those who may not have had access to them,” Ms. Wintour said in an emailed statement. “Undoubtedly, I have made mistakes along the way, and if any mistakes were made at Vogue under my watch, they are mine to own and remedy and I am committed to doing the work.”
Devoting the September issue — the most important of Vogue’s year — to Black contributors indicates Ms. Wintour grasps the intensity of the protest movement roiling the country. But in fashion, of course, appearances are paramount. During a large Condé Nast meeting on race in June, Ms. Wintour — who is the head of the company’s diversity and inclusion council — was conspicuously absent. Employees exchanged Slack and text messages during the session, asking the same question: “Where’s Anna?”
‘Well I honestly don’t think that’s a big deal’
Long before Condé Nast employees went public with complaints about the company’s handling of race, Ms. Wintour has been criticized for Vogue’s portrayals of Black people.
For many readers, a 2008 cover of LeBron James and Gisele Bündchen was reminiscent of racist images of Black men from a century ago. The basketball star is bellowing and gripping the supermodel around the waist, and some saw an unmistakable parallel to a racist World War I propaganda poster. Ms. Wintour also drew criticism when she helped the fashion designer John Galliano, who was fired from Christian Dior in 2011 after he was caught on camera making anti-Semitic remarks and declaring, “I love Hitler.” She continued to support Mr. Galliano even after he was found guilty of a hate crime by a Paris court.
Being indisputably the most important magazine in fashion means Vogue comes in for extra scrutiny — especially in its cover selections. Last year, The Pudding, a publisher of visual essays, used algorithms to analyze 19 years of the Vogue archives and measure the average “lightness” of cover models’ skin tones. In one span, from 2000 to 2005, only three of 81 women were Black. In a statement, Condé Nast said that from 2017 to 2020, 32 percent of Vogue covers featured Black women.
Former Vogue employees said that in recent years, Ms. Wintour has not kept pace with the public’s changing attitudes on issues of racism and discrimination. At a London fashion week party hosted by Burberry in February 2017, the reality TV star Kendall Jenner showed up with a new look: fake gold teeth. Vogue noted the choice in a breezy online story written by a white contributor: “The flashing teeth felt like a playful wink to the city’s free-spirited aesthetic — or perhaps a proverbial kiss to her rumored boyfriend, A$AP Rocky.”
A Black staff member contacted one of the magazine’s executives to object, saying the story insensitively endorsed an instance of cultural appropriation, according to emails obtained by The New York Times. Other staff members brought the article to Ms. Wintour’s attention, with one lieutenant explaining by email why some people on staff and on social media had reacted negatively: “If Kendall wants to do something stupid fine but our writers (especially white ones) don’t need to weigh in and glorify it or ascribe reasons to it that read culturally insensitive.”
Ms. Wintour appeared not to grasp the issue. After several exchanges, she wrote: “Well I honestly don’t think that’s a big deal.”
Condé Nast said in a statement: “The coverage itself is not cultural appropriation.”
Vogue’s content has, though, been accused of being exactly that. The March 2017 issue showcased Karlie Kloss, a white model, in a geisha outfit, with her face in pale makeup and her hair dyed black — a blatant form of yellowface. Readers condemned the layout, which was shot in Japan by Mikael Jansson and included a photograph of Ms. Kloss with a sumo wrestler. New York Magazine’s fashion site The Cut was among the many critics, writing: “One thing’s for certain: Embracing diversity does not mean styling Karlie Kloss as a geisha.”
A Condé Nast human resources executive in charge of the company’s diversity program fielded numerous complaints, and alerted Ms. Wintour. According to three people with direct knowledge of the exchange, Ms. Wintour responded that she took full responsibility, but added the feature could not have been cut because of its “enormous expense.”
After an online outcry, Ms. Kloss issued an apology on Twitter: “These images appropriate a culture that is not my own and I am truly sorry for participating in a shoot that was not culturally sensitive.”
The tweet angered Ms. Wintour, according to the three people, and Ms. Kloss sent a note in an effort to mollify her. “I imagine the feeling is mutual, that it was hurtful to see the criticism from our Japan trip,” the model wrote. “I had written a short piece on social media as I wanted to make known that it was never my intention to offend or upset anyone from this spread.”
Ms. Wintour’s reply the following day was icy: “Thanks Karlie another time please give us a heads up if you are writing about a Vogue issue.” (Ms. Kloss has continued to appear in the magazine’s pages.)
In the fall of 2017, there was yet another awkward exchange on race between Ms. Wintour and Vogue staff members. It concerned a photo shoot by Patrick Demarchelier that showed several dark-skinned Black models wearing head scarves.
As Ms. Wintour weighed whether to publish the images, she asked an employee by email if they might be misconstrued as racist. But she flubbed the attempt, using a dated, offensive term: “Don’t mean to use an inappropriate word, but pica ninny came to mind,” Ms. Wintour wrote.
In a statement, Ms. Wintour said: “I was trying both to express my concern for how our readers could have interpreted a photo and raise the issue for discussion, and I used a term that was offensive. And for that, I truly apologize.”
In the 2017 email, Ms. Wintour requested that a specific Black staff member evaluate the photo shoot. The employee, an assistant, told her superiors that the work was fine. The real problem, she continued, according to several people familiar with the meeting, was why a low-ranked person such as herself had been asked to assess it. The room fell into an uncomfortable silence.
‘A colonial broad’
For Ms. Wintour, who descends from British nobility and was recently made a Dame Commander of the Order of the British Empire, the pace of the current moment of protest may be a challenge. But she is also the daughter of a London newspaper editor and has made a career out of anticipating and responding adroitly to cultural trends.
In 2016, Ms. Wintour made a change to her pool of assistants. (She had three aides for many years, but more recently has had two.) That year, according to three Condé Nast employees, she told the company’s human resources department that her next assistant should be Black. Eventually, most of her assistants were people of color, the people said. The job is highly sought after, a steppingstone to bigger roles in fashion and media, but because it is low-paying, it usually goes to women from wealthy families. The sight of Ms. Wintour’s new adjutants made for a vivid contrast with the usual Vogue hires.
In 2017, Ms. Wintour was part of the small committee that decided to replace the departing Vanity Fair editor Graydon Carter with Radhika Jones, the editorial director of the books department at The Times, making her one of the few top editors of color in Condé Nast’s history. Ms. Wintour has since championed Ms. Jones against in-house naysayers who complained that she had featured too many people of color in Vanity Fair. “My experiences with Anna have been nothing but positive,” Ms. Jones said. “She’s supportive of my vision and she understands what I’ve been trying to achieve and she has helped me to achieve it.”
Last month, Ms. Wintour replaced Stuart Emmrich, a former Styles editor at The Times, as the editor of the Vogue website with Chioma Nnadi, a Black woman who had been the magazine’s fashion director. And in August, Ms. Wintour was instrumental in the hiring of the superstar book executive Dawn Davis, who is Black, as the editor of Bon Appétit. (She replaced Adam Rapoport, who resigned under pressure in June after staff members accused him of running a discriminatory workplace.)
In a statement, Condé Nast said that 42 percent of its editors in chief were now people of color — all of them put in place by Ms. Wintour — and that all photo shoots are ultimately overseen by Raúl Martinez, the corporate creative director, who is the son of Cuban émigrés.
Some of Ms. Wintour’s relationships with Black editors have been rocky. André Leon Talley, a fashion titan, was one of Vogue’s most recognized personalities, often seated beside Ms. Wintour in the front row at runway shows in Paris, Milan and New York. She lavished professional and financial support on Mr. Talley, but the two had a falling-out, and he left the magazine in 2013.
This year, he published a memoir, “The Chiffon Trenches,” which reads in part as a scathing takedown of the fashion industry for its whiteness. During a promotional interview, a podcaster asked Mr. Talley about Ms. Wintour’s apology for Vogue’s “hurtful or intolerant” content. “Dame Anna Wintour is a colonial broad,” Mr. Talley replied. “She’s part of an environment of colonialism. She is entitled and I do not think she will ever let anything get in the way of her white privilege.”
Edward Enninful, a Black editor at Condé Nast who has led British Vogue since 2017, is among the next generation of Condé Nast leaders, and is often mentioned as Ms. Wintour’s potential successor at the magazine’s American flagship. The two are said to have a difficult working relationship, according to people in New York and London who have directly observed their dynamic. (In July, Mr. Enninful said that a security guard at Condé Nast’s London office racially profiled him, telling him to “use the loading bay.” Mr. Enninful described the incident on Instagram, writing “Change needs to happen now.” Condé Nast dismissed the guard, he said, and the post has since been deleted.)
When Ms. Wintour promoted Elaine Welteroth, a Black woman, to a top position at Teen Vogue in 2016, the appointment was heralded as a step forward for diversity. But the promotion was fraught, Ms. Welteroth wrote in her 2019 memoir, “More Than Enough.” Instead of running Teen Vogue herself, as the editor in chief, she was given a more ambiguous title, “editor,” and was asked to split leadership of the publication with two others. Ms. Welteroth felt that the structure effectively sidelined her, giving her less power than that of the previous Teen Vogue boss, Amy Astley. (A year after her appointment, Ms. Welteroth was named editor in chief. She left Condé Nast in 2018.)
“Would any of it have gone down this way if I were a White man?” Ms. Welteroth wrote.
A summer of discontent
The killing of Mr. Floyd sparked difficult discussions about race and diversity in magazines and newspapers across the country, including at The Times. Employees everywhere have become more vocal about what they see as racist attitudes in the workplace.
At Condé Nast, Bon Appétit, a rising profit center thanks in part to its popular cooking videos, has been the red-hot center of dissent in recent months, with many of its staff members quitting in protest. Before the hiring of Ms. Davis to lead the magazine, Ms. Wintour watched closely over its editorial operations, people who worked at the property said.
At the time, people of color who had been featured in the videos complained that they were paid less than their white colleagues and that Bon Appétit had whitewashed their recipes — a trend in food journalism where ethnic cuisines are recast from a white perspective. Readers flooded the comments section of Bon Appétit’s Instagram account with messages of support for those who complained.
In a post to Bon Appétit’s account, Priya Krishna, a freelancer who had accused Condé Nast of unequal pay, was quoted as saying: “I have been forced to think outside of myself and my identity my entire career. So why can’t white editors change their mindset now?”
Ms. Wintour asked to have the item removed, according to internal Condé Nast Slack messages. But by the time of her request, the Krishna post had been online for hours, and Ms. Wintour was warned that deleting it would only attract more attention. The social media team suggested posting new content that would push the item down in users’ feeds. Ms. Wintour approved the plan, according to two people involved in the discussion.
Marcus Samuelsson, a celebrity chef who signed a one-year agreement with Condé Nast as a Bon Appétit consultant, said the company’s history with diversity “was challenging,” but he added that Ms. Wintour had worked to create more inclusivity. “She championed it from Day 1,” he said.
Many people who have worked at Vogue or with Ms. Wintour said that despite her moves toward a more diverse staff, she was still responsible for a hostile workplace. They singled out two of Ms. Wintour’s best known lieutenants: Phyllis Posnick, a Vogue editor who styled the 2017 geisha and head scarf shoots, and Grace Coddington, another fixture at the magazine.
In the aftermath of the 2016 presidential election, as staff members were despondent that Mrs. Clinton had lost to Donald J. Trump, Ms. Posnick said, in a voice that three people could hear, “I knew this was going to happen. It’s all the Blacks’ fault. They didn’t vote.” The next year, when Rihanna showed up late for Vogue’s annual fashion conference — hardly an unusual occurrence for a musician — two people heard Ms. Coddington say, “Black people are late everywhere.”
In a statement, Ms. Posnick, 78, denied making the comment. “I have never and would never say something like this for the simple fact that I don’t believe it,” she said. Ms. Coddington, 79, also disputed that she had made the Rihanna remark: “Why would I say that when I am perennially late myself?”
Ms. Coddington is perhaps the second-most visible figure of the Wintour era at Vogue, having stolen multiple scenes in “The September Issue,” a popular 2009 documentary about the magazine. In 2016, the year she switched her Vogue status from employee to freelancer, Ms. Coddington was photographed in her Manhattan kitchen, with a shelf of racist “mammy” figurines clearly visible in the background. The collection was roundly criticized.
In a statement, Condé Nast noted that Ms. Posnick and Ms. Coddington no longer contributed to the magazine.
To work at Vogue is to inhabit a kind of prep school dormitory where relationships are defined by family ties and social connections that span generations. For many younger people of color who came from less rarefied backgrounds, gaining a toehold was considerably more difficult.
Condé Nast assistants famously put up with grueling hours and humiliating tasks, a job satirized in “The Devil Wears Prada,” a best-selling novel by a former Wintour assistant and later a hit movie starring Meryl Streep as the demanding boss. The hazing is seen as a rite of passage, part of why the company has the nickname “Condé Nasty.” And while Black staff members acknowledge all that, they said that race complicates matters.
Black employees are often asked to participate, or merely show up for, high-level meetings — a corporate practice known as fronting, six people interviewed for this article said. At Vogue, they have been asked to weigh in on cover images or take part in discussions with advertisers, forums that do not typically call on junior employees.
In a statement, Condé Nast said, “Anna and Vogue and all the leaders at our brands have made concerted efforts to build inclusion into all we do every day.”
In 2016, the actress Lupita Nyong’o showed up at Vogue’s office at One World Trade in Lower Manhattan to discuss a planned photo shoot. Ms. Nyong’o sat down with top editors, who had proposed photographing her in her home country, Kenya, along with some family members. The accompanying article would also focus on her family.
Ms. Nyong’o expressed concern about how her family would be portrayed, saying she feared they might come across as cultural props, according to several people with knowledge of the meeting. After a long pause, a junior editor — the only Black staff member in the room — piped up. Addressing the actress, she suggested that the shoot would be an opportunity to showcase Africa, a rarity in any American magazine, let alone Vogue.
The shoot was a go. And the junior editor was never asked to attend a fashion meeting again.
The Trump campaign celebrated a growth record that Democrats downplayed.
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.
GDP number just announced. Biggest and Best in the History of our Country, and not even close. Next year will be FANTASTIC!!! However, Sleepy Joe Biden and his proposed record setting tax increase, would kill it all. So glad this great GDP number came out before November 3rd.
— Donald J. Trump (@realDonaldTrump) October 29, 2020
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.
Black and Hispanic workers, especially women, lag in the U.S. economic recovery.
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.
Ant Challenged Beijing and Prospered. Now It Toes the Line.
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.
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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