The businessman described the move as a step up to the "next level of corporate governance", and transition from a company that fully relies on individuals to "one built on systems of organizational excellence and a culture of talent development".
Then Ma will finish his run on the Alibaba Group's board of directors after its annual shareholder meeting in 2020.
"While remaining as executive chairman in the next 12 months, I will work closely with Daniel to ensure a smooth and successful transition", Mr Ma said in the statement.
"The Times story was taken out of context and factually wrong", the daily quoted the spokesman as saying.
But it is still extremely rare for a founder of big and transformative tech firm, especially one with a cult-like status like Ma, to retire so early.
Founded in 1999 by Chinese teacher-turned-entrepreneur Jack Ma as a platform to connect Chinese manufacturers with the world, Hangzhou-based Alibaba stands among one of the largest companies in the world.
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In January previous year, Mr Ma said he had had a "great meeting" in NY with then US President-elect, Donald Trump. It owed its inception to Alibaba's formative years, long before the online marketplace forayed into cloud computing, cashless payments, artificial intelligence and Hollywood movies, the Post report said. Zhang, 46, has been in the job since 2015 after serving as the company's chief operating officer.
"His analytical mind is unparalleled, he holds dear "our mission and vision, he embraces responsibility with passion, and he has the guts to innovate and test creative business models", Mr. Ma said".
Mr Ma said recently in an interview with Bloomberg that "there's a lot of things I can learn from Bill Gates", who also founded his own philanthropic foundation before stepping down as chief executive of Microsoft.
"On intellect and energy, I can barely keep up with him".
He said he wanted to dedicate more time to philanthropy through the Jack Ma Foundation.
With a marketing phenomenon known as Singles' Day, the company eclipses the two biggest shopping events in the US - Black Friday and Cyber Monday.