1/9
Of course regulators worry about Ant's disruptive potential. Its overwhelming success had less to do with its technological innovation and more to do with the fact that a lightly regulated entity will always outperform its highly regulated rivals.
scmp.com/business/banki…
Of course regulators worry about Ant's disruptive potential. Its overwhelming success had less to do with its technological innovation and more to do with the fact that a lightly regulated entity will always outperform its highly regulated rivals.
scmp.com/business/banki…
2/9
Ma thought that his backdoor deregulation – which he called “disruption” – was a good thing, but while it might at first seem like China would benefit economically from the replacement of its neolithic banking sector with a swifter, more flexible financing and savings...
Ma thought that his backdoor deregulation – which he called “disruption” – was a good thing, but while it might at first seem like China would benefit economically from the replacement of its neolithic banking sector with a swifter, more flexible financing and savings...
3/9
system, in fact an inefficient, financially repressed and highly controlled banking system has always been at the heart of the Chinese growth model. It is the existing banking system that is responsible for much of the past growth in excess economic activity.
system, in fact an inefficient, financially repressed and highly controlled banking system has always been at the heart of the Chinese growth model. It is the existing banking system that is responsible for much of the past growth in excess economic activity.
4/9
Had China’s financial system been more efficient and flexible, in other words, it would have been impossible for Beijing to force the system to finance so much non-productive activity and to force households to subsidize manufacturing and investment through repressed...
Had China’s financial system been more efficient and flexible, in other words, it would have been impossible for Beijing to force the system to finance so much non-productive activity and to force households to subsidize manufacturing and investment through repressed...
5/9
interest rates. You cannot have one without the other, and as long as Beijing wants to target economic growth rates that exceed the real underlying growth in the economy, it needs a highly controlled banking system.
interest rates. You cannot have one without the other, and as long as Beijing wants to target economic growth rates that exceed the real underlying growth in the economy, it needs a highly controlled banking system.
6/9
What's more, even if Beijing had decided to give up targeting excessively high rates of growth in economic activity (something which it clearly hasn't done), the country’s financial sector has been left with so much debt and insolvency that anything that introduces...
What's more, even if Beijing had decided to give up targeting excessively high rates of growth in economic activity (something which it clearly hasn't done), the country’s financial sector has been left with so much debt and insolvency that anything that introduces...
7/9
flexibility in financial intermediation would risk undermining the system. For all its bad debt and highly unstable balance sheets, China was never likely to have a financial crisis because regulators could always restructure the liabilities of the financial system at will.
flexibility in financial intermediation would risk undermining the system. For all its bad debt and highly unstable balance sheets, China was never likely to have a financial crisis because regulators could always restructure the liabilities of the financial system at will.
8/9
Beijing can call again and again for more open, efficient and flexible financial markets, but we shouldn’t simply assume that there is no direct link between the country’s economic performance (including its ability to control its trade account) and the structure of its...
Beijing can call again and again for more open, efficient and flexible financial markets, but we shouldn’t simply assume that there is no direct link between the country’s economic performance (including its ability to control its trade account) and the structure of its...
9/9
monetary and financial markets. In either case an overhaul of the latter must inevitably be associated with a substantial change in the former. GDP growth targets require a highly controlled and inefficient banking system.
monetary and financial markets. In either case an overhaul of the latter must inevitably be associated with a substantial change in the former. GDP growth targets require a highly controlled and inefficient banking system.
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