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All Sections Search Read The Diplomat, Know The Asia-Pacific My Account Sign In Subscribe Central Asia East Asia Oceania South Asia Southeast Asia | Security Politics Diplomacy Economy Society Environment | Magazine | All × search Regions * Central Asia * East Asia * Oceania * South Asia * Southeast Asia Topics * Diplomacy * Economy * Environment * Opinion * Politics * Security * Society Blogs * ASEAN Beat * Asia Defense * China Power * Crossroads Asia * Flashpoints * Oceania * Pacific Money * The Debate * The Koreas * The Pulse * Tokyo Report * Trans-Pacific View More * Features * Interviews * Photo Essays * Podcasts * Videos Magazine JANUARY 2023 2023: WHAT TO EXPECT The Diplomat * Home Page * About Us * Contact Us * Write for Us * * Advertise * Syndicate * Privacy * Newsletter * Subscriptions INTERVIEWS FINTECH AND ‘CHINA’S REINVENTION OF MONEY’ RECENT FEATURES ECONOMY 2023 NEW YEAR RESOLUTIONS FOR ASIA’S BIGGEST ECONOMIES POLITICS KAZAKHSTAN’S BLOODY JANUARY: DAY 6, ALMATY POLITICS KAZAKHSTAN’S BLOODY JANUARY: DAY 5, TARAZ TO SHYMKENT POLITICS KAZAKHSTAN’S BLOODY JANUARY: DAY 4, UST-KAMENOGORSK TO KOKSHETAU POLITICS KAZAKHSTAN’S BLOODY JANUARY: DAY 3, URALSK TO KYZYLORDA MAGAZINE BARGAINING CHIPS: US ALLIES AND EXPORT CONTROLS POLITICS KAZAKHSTAN’S BLOODY JANUARY: DAY 2, AKTOBE TO ATYRAU MAGAZINE CAN NEPAL ACHIEVE POLITICAL STABILITY? POLITICS KAZAKHSTAN’S BLOODY JANUARY: DAY 1, ZHANAOZEN TO AKTAU MAGAZINE THE UNRAVELING OF KAZAKHSTAN’S SOCIAL CONTRACT MAGAZINE 2023: WHAT TO EXPECT IN THE ASIA-PACIFIC MAGAZINE ROBERT GLASSER ON AUSTRALIA’S TURN TO CLIMATE ACTION INTERVIEWS | ECONOMY | EAST ASIA FINTECH AND ‘CHINA’S REINVENTION OF MONEY’ Insights from Martin Chorzempa. By Mercy A. Kuo for The Diplomat December 19, 2022 Credit: Depositphotos Advertisement The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Martin Chorzempa ̶ senior fellow at the Peterson Institute for International Economics and author of “The Cashless Revolution: China’s Reinvention of Money and the End of America’s Domination of Finance and Technology” (Public Affairs 2022) – is the 348th in “The Trans-Pacific View Insight Series.” Identify the key components of China’s fintech revolution. Fintech transformed a backward financial system into a world-leading adopter of technology. It began with online payments, which tech firms had to invent themselves because China lacked the convenient system based on credit cards we take for granted. But payments then became the foundation to build super apps that fused together just about anything you can do with a bank, like investing and getting a loan, with a whole ecosystem of online and offline services. Think your mobile banking app plus Venmo, Messenger, Uber, Twitter, and Kindle all in one. What are the elements and impacts of China’s financial repression? DIPLOMAT BRIEF WEEKLY NEWSLETTER N Get briefed on the story of the week, and developing stories to watch across the Asia-Pacific. Get the Newsletter Financial repression meant a state-dominated financial system with limited competition and choice, all designed to funnel people’s savings into banks at low interest rates so cheap loans could flow to state priorities. Often the return on deposits was below inflation! It was very monopolistic with low pressure to innovate. Fintech disrupted this system, bringing competition that led banks to shape up and offer better service to compete. Enjoying this article? Click here to subscribe for full access. Just $5 a month. Explain the correlation between China’s social credit system and crackdown on financial risk. Both stem from a major shift in under Xi Jinping, including both increased risk aversion and a desire to increase government oversight over the economy. Social credit seems dystopian, but its roots come from an attempt to solve real problems, like a surprising inability to enforce court judgments. The crackdown on risk similarly comes from legitimate concerns that rampant lawbreaking in finance created major risks of financial crisis that needed to be curbed. Both can be taken too far, as we have seen with social credit as its punishments proliferated and became more draconian, like bans on planes and trains applied to journalists who got in trouble for their reporting. Examine the overseas reach of China’s fintech. Advertisement It has actually been surprising how limited the reach of Chinese fintech abroad has been despite their immense domestic success, abundant capital, data, and advanced technology. Chinese tourists and students in dozens of countries can pay with Alipay and WeChat Pay, but they have largely failed to gain users overseas. In part this is due to classic business difficulties – adapting to a foreign market different than China, where U.S. companies like WhatsApp managed to beat out WeChat in the social media marketplace. To a great extent, however, they have run aground on national security concerns, especially around the access to sensitive data on foreign citizens that operating a super app would afford them. Assess how China’s cashless revolution is bringing an end to the United States’ domination of finance and technology. The flow of ideas in fintech has reversed, with onetime copycats in China now leading in key areas of innovation, inspiring Silicon Valley titans like Mark Zuckerberg and Elon Musk. The U.S. still has enormous advantages, but it cannot be complacent as Chinese companies become more competitive internationally and geopolitical concerns like sanctions lead many countries to explore alternatives to the current USD-based system. You have reached the limit of 5 free articles a month. You have read 1 of your 5 free articles this month. Subscribe to Diplomat All-Access Enjoy full access to the website and get an automatic subscription to our magazine with a Diplomat All-Access subscription. Subscribe Now Already a subscriber? Login here Authors CONTRIBUTING AUTHOR MERCY A. KUO Mercy Kuo is Executive Vice President at Pamir Consulting. View Profile Tags * Interviews * Economy * East Asia * China * Alipay * China financial sector reform * China financial service sector * China fintech * China tech industry * WeChat COVID-19 IN ASIA C JANUARY 07, 2023 HOW BEIJING ACCIDENTALLY ENDED THE ZERO COVID POLICY JANUARY 06, 2023 THAILAND SAYS COVID-19 TESTS NOT NEEDED FROM CHINESE TOURISTS JANUARY 06, 2023 NORTH KOREA LIKELY TO LIFT PANDEMIC BORDER RESTRICTIONS IN 2023 MULTIMEDIA M JANUARY 09, 2023 LOCKING HORNS WITH THE KHMER ROUGE JANUARY 06, 2023 THIS WEEK IN ASIA: JANUARY 6, 2022 JANUARY 06, 2023 A NEW DEFENSE ERA: JAPAN’S 2022 NATIONAL SECURITY STRATEGY INTERVIEW I JANUARY 05, 2023 ‘SPIES AND LIES’: PEELING BACK THE CURTAIN ON CHINA’S COVERT OPS BY MERCY A. KUO Insights from Alex Joske. MAGAZINE M JANUARY 01, 2023 BARGAINING CHIPS: US ALLIES AND EXPORT CONTROLS JANUARY 01, 2023 CAN NEPAL ACHIEVE POLITICAL STABILITY? JANUARY 01, 2023 THE UNRAVELING OF KAZAKHSTAN’S SOCIAL CONTRACT JANUARY 01, 2023 2023: WHAT TO EXPECT IN THE ASIA-PACIFIC RELATED R APRIL 05, 2021 HOW WILL CHINA’S SOVEREIGN DIGITAL CURRENCY AFFECT FINTECH? BY SARA HSU China’s sovereign digital currency is likely to have a mainly positive impact on the fintech sector. JULY 11, 2022 CHINA-US TECH RACE: ASSESSING TECHNOLOGICAL EMERGENCES BY MERCY A. KUO Insights from Richard Silberglitt FEBRUARY 08, 2022 CHINA’S DIGITAL POWER: IMPACT ON THE EU BY MERCY A. KUO Insights from Tim Rühlig. AUGUST 12, 2021 CHINA’S INSURTECH CRACKDOWN: TECH SAGA CONTINUES BY SARA HSU As if the existing tech crackdown wasn’t sufficient, China just rolled out new regulations for internet insurance companies. TOP STORIES T JANUARY 06, 2023 THAILAND SAYS COVID-19 TESTS NOT NEEDED FROM CHINESE TOURISTS BY SEBASTIAN STRANGIO Thai officials are projecting that 5 million Chinese nationals will visit in 2023, buoying the recovery of the country's tourism sector. JANUARY 02, 2023 KAZAKHSTAN’S BLOODY JANUARY: DAY 1, ZHANAOZEN TO AKTAU BY CHERYL L. REED As 2022 began, unrest sparked in a familiar cauldron in western Kazakhstan’s discontented oil towns. DECEMBER 30, 2022 2022: THE YEAR JAPAN AND GERMANY BECAME ‘NORMAL’ COUNTRIES BY CHIETIGJ BAJPAEE Japan and Germany rediscovered their geopolitical voice in 2022, making parallel efforts to develop more assertive national security postures. DECEMBER 29, 2022 PAKISTAN AND THE US JOIN HANDS AGAINST THE PAKISTANI TALIBAN BY UMAIR JAMAL Pakistan will be wary of becoming a staging post for U.S. counterterrorism operations in Afghanistan as this would worsen its already testy ties with the Taliban regime. FEATURES F JANUARY 08, 2023 2023 NEW YEAR RESOLUTIONS FOR ASIA’S BIGGEST ECONOMIES BY ANTHONY FENSOM Challenges and prospects for China, Japan, and India's economic growth in 2023. JANUARY 07, 2023 KAZAKHSTAN’S BLOODY JANUARY: DAY 6, ALMATY BY CHERYL L. REED Almaty’s journalists witnessed Kazakhstan’s largest city roil with protests, peaceful at first, then become engulfed in deepening anger and shocking violence. JANUARY 06, 2023 KAZAKHSTAN’S BLOODY JANUARY: DAY 5, TARAZ TO SHYMKENT BY CHERYL L. REED In two southern Kazakhstan cities, the January protests devolved into shocking violence, from the use of live ammunition against protesters to police beatings of those detained. JANUARY 05, 2023 KAZAKHSTAN’S BLOODY JANUARY: DAY 4, UST-KAMENOGORSK TO KOKSHETAU BY CHERYL L. REED Journalists and others faced questions, fines, and jail cells after covering protests in Kazakhstan. BLOGS B JANUARY 09, 2023 WHY DID MYANMAR’S JUNTA GRANT WIRATHU A NATIONAL AWARD? BY SEBASTIAN STRANGIO Last week, the ultra-nationalist monk was granted the title of "Thiri Pyanchi," an award recognizing “outstanding work for the good of the Union of Myanmar." JANUARY 09, 2023 PHILIPPINE MILITARY CHIEF REPLACED BY RETIRING GENERAL BY JIM GOMEZ The government did not provide any explanation for the replacement of Lt. Gen. Bartolome Bacarro, who was supposed to serve until August 2025. JANUARY 09, 2023 BOAT CARRYING 184 ROHINGYA REFUGEES LANDS IN WESTERN INDONESIA BY SEBASTIAN STRANGIO The leaky wooden vessel is just the latest to reach the shores of Aceh, as more and more refugees undertake the dangerous ocean crossings. JANUARY 08, 2023 WITH CHIPS ON THE BRAIN, NETHERLANDS SEEKS AN ALLY IN SOUTH KOREA BY FRISO STEVENS Both the Netherlands and South Korea are crucial semiconductor manufacturers – and neither wants to be caught in the China-U.S. crossfire. Regions * Central Asia * East Asia * Oceania * South Asia * Southeast Asia Topics * Diplomacy * Economy * Environment * Opinion * Politics * Security * Society Blogs * ASEAN Beat * Asia Defense * China Power * Crossroads Asia * Flashpoints * Oceania * Pacific Money * The Debate * The Koreas * The Pulse * Tokyo Report * Trans-Pacific View More * Features * Interviews * Photo Essays * Podcasts * Videos Archives * A New Japan * By Other Means * APAC Insider * Asia Life * Asia Scope * China, What's Next? * Indian Decade * James Holmes * New Emissary * New Leaders Forum * Sport & Culture * Tech Biz * Tokyo Notes * Zachary Keck The Diplomat * About Us * Contact Us * Write for Us * Partners * Advertise * Syndicate * Privacy Policy * Newsletters * Subscriptions Magazine JANUARY 2023 2023: WHAT TO EXPECT © 2023 Diplomat Media Inc. All Rights Reserved. Sign In Email Please enter your email address Password Please enter your password Forgot Password? 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