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Analysis | China’s fintech ecosystem is the world’s largest, but will Beijing’s tech crackdowns affect the landscape?
- China’s economy is largely cashless, and it has the highest penetration rate of fintech services among major economies, at 87 per cent
- Even with Beijing reining in big tech companies, experts say China’s fintech sector looks to remain competitive
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China carved out a lead in fintech services over the past decade, with big tech firms having taken the lead on the back of deregulated government policies and surging public demand for electronic payment options.
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As a result, the world’s second-largest economy is largely cashless, and mobile payments via private-sector platforms are ubiquitous in commerce.
Meanwhile, Beijing has been rolling out a central bank digital currency that has undergone several pilot programmes throughout the country, including being used by foreign visitors during the recent Winter Olympics.
And China has become a magnet for fintech investments, with the total growing from US$900 million in the second half of 2020 to more than US$1.3 billion in the first half of 2021, according to an analysis by accounting firm KPMG.
However, uncertainties have arisen as Beijing stepped up its crackdowns on big tech companies such as Alibaba, particularly in the past year, but analysts expect China’s fintech sector to remain competitive. Alibaba owns the South China Morning Post.
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