Office for National Statistics
The Cashless Revolution
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The Cashless Revolution

China's Reinvention of Money and the End of America's Domination of Finance and Technology

Martin Chorzempa
Public Affairs, 2022

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China’s economic rise has proven rapid, messy and – in the case of its fintech sector – downright revolutionary. Belying its stereotype as the world’s sweatshop, China has now become the global leader in financial technology, scholar Martin Chorzempa notes in this intriguing report. Not long ago, few Chinese citizens used credit cards or owned stocks. But Chinese tech companies, led by Alibaba and Tencent, smelled opportunity, and today cash has virtually disappeared from China’s economy. Yet as China moves further into authoritarianism, Chorzempa highlights, the lack of financial privacy has real impacts on individuals who fall out of favor.

Summary

China has sprinted ahead of the West in payment and financial technology.

One billion people can pay, borrow and invest through built-in-China superapps like Alipay and WeChat. China’s payment systems operate far more cheaply than the credit card systems that dominate in the United States and Europe. Chinese superapps have elbowed out banks and the government. This new breed of financial services is so powerful that a consumer in the United States, Europe, Japan or Korea would need dozens of apps to approach the utility of a single Chinese superapp. With the speed of their adoption, these financial services have all but replaced cash. Even panhandlers have adjusted to China’s post-cash society – they post QR codes to accept donations.

The rise of China’s superapps carries a notable downside. As Beijing continues to tighten its control over Chinese society, a distinct possibility arises that the fintech revolution will only intensify the government’s control over individuals. Beijing adds millions of names to a blacklist every year. In one example, an investigative journalist reported about official corruption and then found...

About the Author

Martin Chorzempa is a senior fellow at the Peterson Institute for International Economics. A graduate of the Harvard Kennedy School of Government with a master's degree in public administration and international development, he conducted research in China from 2013 to 2015.

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