China Brief editor wrote an op-ed for the Nikkei Asian Review, discussing the sudden rise of online investment funds as a high-interest alternative to state-owned bank accounts. He argued that reformers in the Chinese government have embraced these funds as a means of putting pressure on state banks to reform.
How China’s reformers learned to stop worrying and love online finance
By David Cohen and Jia Minhui
Chinese President Xi Jinping took office in 2012-13 amid high hopes for economic reform. States banks seemed to be a priority, raising expectations among domestic and international observers that new regulations would increase returns for savers and encourage consumer demand. But with little movement since then, it seemed that China’s leaders had either lost their taste for banking reform, or that powerful vested interests were blocking proposed changes.
However, significant comments about online finance by China’s central bank governor and the premier, Li Keqiang, at this week’s meeting of the National People’s Congress, the country’s legislature, show the administration’s reformers are pushing for change. With the emergence of new online financial markets, China’s reformers have found private companies able to take on the country’s mighty financial institutions for them. In an apparent rebuttal of calls from state banks to ban or tightly regulate rapidly-growing online investment markets, they ruled out a ban and praised Internet finance as a force for reform…
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