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The enormous growth of e-commerce and fintech in China has been highlighted in a recent report.
A case study by the Better Than Cash Alliance, a UN-based partnership of governments, businesses and NGOs that aims to accelerate the transition to digital payments to encourage inclusive growth, shows that digital payments can be expected to increase China’s GDP by $236 billion by 2025.
Alipay and WeChat enabled US$2.9 trillion of digital payments in China in 2016—20 times the 2012 figure.
And it’s not just payments systems that are being revolutionised by Chinese digital technology: business financing is also experiencing a massive disruption. According to the report: ‘As of September 2016, a total of RMB 740 billion (US$107.3 billion) had been lent on the Alipay platform to over 4.11 million small and micro enterprises and entrepreneurs.’
This leads to the potential for more inclusive growth. Ruth Godwin-Groen of the Better Than Cash Alliance says: ‘We know that when people – especially women – gain access to financial services, they are able to save, build assets, weather financial shocks, and have a better chance to improve their lives.’
What does all this mean for Australia? At a time when there is some concern about Amazon’s entry into the Australian market, the AFR’s Tony Boyd reminds us of the comparative size of China’s e-commerce firms, as well as their growing role in the financial sector: ‘China is home to the largest peer to peer lending in the world thanks to the connectivity created by Alibaba and Tencent.’ In 2015, Boyd points out, the total global merchandise value passing through Alibaba’s sites was US$448 billion. This was double the value of eBay and Amazon’s traffic combined.
The Better Than Cash Alliance report can be found here.
And Tony Boyd’s AFR article is here (subscribers only).
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