When Financial Technology Meets Financial Governance in China

On Monday, February 4th, students, professors, and researchers gathered at CSCC to hear about “Digital Technologies and Financial Governance in China’s Fin-Tech Industry.” Jing Wang, a Visiting Assistant Professor of Communication at Tulane University, spoke to everyone about this hot-button issue.

She began her talk by introducing the prevalence of fin-tech in China. With 4/5 of fin-tech leaders from China and with half of the fin-tech market in China, China seems committed to paving a path in fin-tech. Professor Wang explained that unlike the Chinese financial sector, which is known for its statist methods, the Chinese fin-tech industry has actually been able to create new modes of interaction between the government and civil society.

Three types of fin-tech exist in China: digital payment, digital loans, and digital investment. Many people know of AliPay and WeChat in terms of digital payment. However, digital lending has become popular in China too, with ads such as “you can borrow money anytime, anywhere.” If someone has good credit record on “sesame credit”, then he/she can easily obtain credit loans. When people then have dormant cash, they naturally want to invest. Digital investment has swept China, as evidenced by Yue Bao, the world’s largest money market fund with a $150 billion valuation.

“Internet finance” grew in China after the 2008 financial crisis. Providing an alternative form of finance to offset stagnation, China began to harness the internet for economic development. In 2015, China unveiled the “Internet Plus” strategy to aggressively promote economics in various industries, including the fin-tech one. The Chinese Communist Party (CCP) began to see fin-tech as a game changer. However, as Professor Wang noted, the CCP also saw fin-tech as a troublemaker. After several notable Ponzi schemes and fraudulent investment cases, the CCP began to investigate allfin-tech companies. These investigations marked the beginning of China’s new form of financial governance. Professor Wang stressed that, in order to understand fin-tech in China today, people must learn how politics have shaped  its development.

Professor Wang has looked at how the Chinese state has regulated the fin-tech industry. Her main research question focused on the paradox of how the CCP has tried to justify its rule while promoting institutional mechanisms which challenge its rule.

She researched policy practices from several institutions, such as: The People’s Bank of China, China Finance, and China Banking Regulatory Commission, and she conducted in-depth interviews with several actors, such as: fin-tech officers, fin-tech makers, and fin-tech entrepreneurs. From her research, she concluded that the Chinese state has redefined regulatory coverages and actors in the fin-tech space. An assembly of policy makers are now involved in fin-tech. Professor Wang used the acronym “PILES” for these new policy makers. It includes political institutions (National Stability Leading Group), information and technology institutions (Cyberspace Administrative Office), legal institutions (Legislative Affairs Office of the State Council), economic institutions (Development and Reform Commission), and specialized institutions (Ministry of Education). On one hand, “PILES” reveals a diversity of actors in the policy space. On the other hand, it shows that the Party is containing de-centralized regulation to try to reinforce financial governance. 

Professor Wang concluded that financial digitization has become a part of financial institutions in China. In this digital age, the CCP has tried to command fin-tech regulation but it does so with the understanding that policy making needs to be more de-centralized. Because of the many overlapping stakeholders, fin-tech has also been essential to institutional reforms of the financial sector and has been intertwined with practices of internet governance.

This talk had one of the highest degrees of academic diversity in CSCC event history. Wharton MBAs, East Asian Studies students, Political Science professors, and technology researchers all gathered to hear Professor Wang. They asked questions about the CCP’s stance on blockchain, the link between entrepreneurship and fin-tech, and the role of AliPay in the social credit system.


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