Opinion / Op-Ed Contributors

Alibaba a new link in China-US ties

By Li Zheng (China Daily) Updated: 2014-09-09 07:39

Alibaba's upcoming initial public offering on the New York Stock Exchange has raised doubts both in China and the United States, generating negative vibes for China-US trade relations, which is a strange reaction.

In China, Alibaba's decision to launch its IPO in the United States rather than in China is being seen as a failure of China's capital market. Some observers have even described the decisions of Alibaba, Tencent, Baidu and some other companies to list overseas as "non-patriotic" because their users and source of revenue are mostly Chinese citizens while most of their profits go to overseas investors.

In the US, Alibaba's listing is seen as a victory for an "unruly company". In June, the US Economic Security Review Commission issued a report, "The Risks of China's Internet Companies on US Stock Exchanges", which says the corporate structure of Alibaba, because of its variable interest entity, or VIE, caries some legal risks and could lead to legal disputes. Other US-based analysts say Alibaba would become a powerful competitor to Amazon and other US e-commerce companies, and pose a threat to the US e-economy.

Such criticism, however, has not lowered Alibaba's enthusiasm. According to some US and Chinese investment agencies, the Alibaba IPO could raise more than $20 billion, making it the largest in history. In China, some overseas funds have started designing products to help Chinese investors buy Alibaba shares. Since money speaks best in today's market-driven world, Alibaba's listing on the NYSE will prompt the US and China to again recognize the importance of their economic ties.

The Alibaba IPO shows that China will continue to open up its market and continue its integration into the international economy. Alibaba is not only an Internet company but also a symbol of emerging private enterprises in China. E-commerce is gradually breaking down the geographical and administrative barriers in the Chinese market, and creating a new entrepreneurial class in the country.

Previous Page 1 2 Next Page

Most Viewed Today's Top News