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As such, of the Chinese government Decision to dissolve AlipayThe financial services superappli, operated by Jack Ma’s Ant Group in billionaires, may be seen as yet another generous state response to effective new regulatory challenges. Ownership of online payment companies and the big data sets of consumer transactions they create can have a significant impact on privacy and financial stability.But believe that this is the ultimate motive Chinese Communist Party Managing this data and destroying rival power centers is naive. Bringing a major transformation of Chinese society is part of the CCP’s authoritarian quest.
Regulators have already instructed Alipay to spin out two lending services, Huabei, a consumer lending product, and Jiebei, which focuses on small unsecured loans.The latest demands from the government revealed by the Financial Times on Monday will also see the company being forced to hand over. Through user data Used to make loan decisions for new joint ventures partially owned by the state. The new company will acquire the long-awaited credit scoring license from Ant Group and will be able to sell the output of this data to other financial institutions.
This should be yet another warning for anyone doing business in China if needed. There seems to be no legal basis for splitting the Ant Group beyond the CCP’s orders. This seems to be motivated by the company’s innovation threat to state-owned banks. Regulatory risk should now be the number one concern for those investing in China. The crackdown on games and after-school tuition was not announced in advance by telegram. Ant Group’s gradual reduction shows its destiny awaiting companies that frustrate the one-party system.
Concerns about how regulators should handle large financial data are not unique to China. Just before becoming Gary Gensler, the new chief of the US Securities and Exchange Commission last year, Published a treatise It warns that using artificial intelligence to make lending decisions can lead to financial instability. Ownership of such information by major tech companies has also caused regulatory hackles elsewhere. Data privacy watchdog Facebook’s fraudulent Libra digital currency means that social media giants have access to such records, and many show that the original proposal had little information on how to protect this information. In a democratic country.
But recent moves by Beijing should be seen in the context of broader changes in China’s economy and society. In particular, Ant’s data has remained a central concern for building authoritarian “social credit” surveillance systems. Whereas traditional credit scoring uses just a handful of factors such as employment, outstanding debt, recording invoice payments, and applying for additional loans, Ant’s “Goma Score” is from underground fares to Alibaba. Includes everything to create a single measure of reliability, up to your purchase at.in the meantime The jury hasn’t come out yet As to whether it provides lenders with much of their competitive advantage, the data will provide the state with yet another means of monitoring Chinese citizens, especially when combined with the new digital yuan.
Knowing that state-owned credit institutions can monitor all transactions has a chilling effect on Chinese society. We understand the privacy concerns about putting this kind of information in the hands of tech giants. But in this case, the cure (focusing on the watched hand) is much worse than the illness.
Alipay break-up is power grab by China’s government Source link Alipay break-up is power grab by China’s government