Moreover, virtual currencies, third party payment systems and wealth management products all have important potential and actual linkages with each other that impact on existing policies and regulations.
With the scale of China’s market and financial assets and the speed with which business is undertaken online, both market participants and policy makers should examine these intersections for opportunities and risks.
For example, there are now a number of crowdfunding and online lending apps that allow middle-class Chinese investors to pool their money to buy property overseas. While the ceiling of 50,000 US dollars per year on how much an individual Chinese person can take out of the country may appear to be a meaningful constraint, 10 million Chinese investors equals 500 billion US dollars in outbound investment. Given the middle class in China now exceeds 400 million, small changes in their financial behavior can have real consequences.
Their actions can have a meaningful macro-level impact and the speed at which their behavior changes, such as taking up online transactions, means that more PBOC attention and resources will be devoted to areas such as this.
Finally, “inclusive finance” will target not only the poor and people who don’t have bank accounts (or hardly use the banking system) in China but will also impact on the poor across the world. As initiatives such as the Belt and Road gain further momentum, China will take a much larger role in bringing the rest of the world's unbanked into the digital era. Startups ready and able to develop “multi-local” inclusive finance products and services will have a powerful PBOC wind behind them.
Andy Mok is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.
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