This edited volume presents fruits from the think-tank research led by the Institute of Digital Finance (IDF) at Peking University and is published by the Brookings Institution, a public policy organization based in Washington, DC. This background has profoundly shaped the strengths and limits of this book.
To be sure, this book is a very timely contribution to our understanding of the fintech sector in China. It maps out the development trajectories of a broad range of fintech categories, from payment and loans to investment and wealth management. In the meantime, it provides a rich set of data sources and metrics for evaluating the fintech economy. If the innovators and regulators in China have enabled the world's largest and fastest-changing fintech market, this book includes some of the most significant models and lessons drawn from this arena. It is thus a valuable reference for financial innovation in the global context.
Following the introductory chapter, each of the following chapters covers a particular topic, including financial inclusion, mobile payment, peer-to-peer lending, digital lending, robo-advisor (wealth management), and China's central bank digital currency. These chapters demonstrate the dynamics of the most rigorous fintech categories and elaborate on what such driving forces can offer to improve the inclusiveness, efficiency and quality of financial services. Some chapters stand out for their contribution to indexation and modulization. Chapter two by Feng Guo and Jingyi Wang constructs a Digital Financial Inclusion Index, which is composed of three parts: level of digitization, breadth of coverage and depth of use. Chapter six by Yiping Huang compares the institutional mechanisms of supply chain financing, P2P lending and big-tech credit, and points out the opportunities, challenges and policy implications of digital lending, the most under-developed fintech sector.
Other chapters address how digitization reshapes China's financial infrastructure (chapter four), financial regulation (chapter 11), and the international monetary system (chapter 12). Although the overall positioning of this book is to highlight the fintech advancement in China, the issues of the digital divide and trickle-down effect (chapter nine) and latent regulative control (chapter five) are also mentioned. The editors then conclude the book by showing the opportunities for international cooperation on financial innovation and regulation. All the chapters indicate the potential to generalize the Chinese fintech experience in the global context.
Most chapters devote equal effort to the descriptive and analytical aspects, i.e. the first half of each chapter reviews a particular sector's (e.g. mobile payment, peer-to-peer lending) development, whereas the other half brings up original data, analyses and research findings. For scholarly readers, the former part might appear banal as it seems to be a collage of business news and trade reports. Yet, such an arrangement makes each chapter an all-in-one access to a particular topic for the larger public, including non-experts, industry practitioners, government officials and other public readers who are interested in digital financial innovation.
The most striking limit of this book is the lack of conversation among scholars from diversified disciplines and fields, which undermines its value in Chinese studies and its pertinency beyond economics. For example, chapter two has done a remarkable job forging the index and measurement for the level of digital financial inclusion using ten-year longitudinal data. Yet, it leaves some core questions unanswered. How does the level of digital financial inclusion correlate to the level of regional and/or systemic financial risks? Moreover, to what extent does digital financial inclusion contribute to reducing the gap between developed and under-developed areas in China? Chapter four studies financial infrastructure by the division of hard versus soft infrastructures, which is convenient for the author to sort out the selected cases, but it lacks research in the digital reform in China's financial industries. Some data sources are no longer valid, for instance, the wdzj.com reference cited in chapter five (p. 114). Topic-wise, the development of insurance technology is missing.
Furthermore, the methodologies adopted in the main chapters are highly homogenized. As the economic sociologist Donald McKenzine points out in An Engine, Not a Camera: How Financial Models Shape Markets (MIT Press, 2006), research in economics is often constrained by the dominant research paradigm, which relies on the quantification of the research subjects and the modulization of the available data. Also, these chapters have focused on fintech's economic consequences at the macro-economic level, whereas its political and social implications are omitted. For instance, how has digital technology influenced institutional reform in China's banking sector? What is the role of digital finance in reshaping the financial culture in Chinese society? A more holistic view of the “digital financial revolution in China” urges answers to such questions.
In short, fintech in China is a fresh and rich field for China studies. Following the book project on internet finance in China (Xie et al., Internet Finance in China: Introduction and Practical Approaches, Routledge, 2016), this current volume is a pioneer in summarizing the most cutting-edge phenomena in the field and making them approachable to the public. Yet, it still has room to develop in-depth analyses if it sets its footing in economics, particularly on the correlations between fintech and the real economy. For a more comprehensive discussion of Chinese fintech, the editors would need to include various perspectives from beyond those of economists.
