Hostname: page-component-5cf477f64f-tx7qf Total loading time: 0 Render date: 2025-04-06T23:54:58.750Z Has data issue: false hasContentIssue false
  • English
  • Français

Financializing authoritarian capitalism: Chinese fintech and the institutional foundations of algorithmic governance

Published online by Cambridge University Press:  09 November 2023

Julian Gruin
Julian Gruin*
Affiliation:
University of Amsterdam, Netherlands
*
Corresponding author: Julian Gruin, Department of Political Science, University of Amsterdam, Postbus 15578, Amsterdam, Netherlands, 1001NB. Email: [email protected].
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

Digital credit scoring is driving a number of significant transformations in Chinese economy and society, catalyzing financial liberalization, deepening financial inclusion, and shifting economic power beyond the previously state-controlled commercial banking system. Yet the significance of financial technology is informed in turn by locally specific traditions of governance and regulation. This article critically interrogates the rise of Chinese fintech, reconceptualizing it as a process of financialization that is embedded in a Chinese systems-oriented authoritarian governance tradition. On the basis of documentary sources, Chinese-language secondary literature, and fieldwork conducted from 2016-18, it argues that in addition to disrupting existing practices of financial intermediation, the emergence of novel digital credit scoring technologies is enabling new forms of algorithmic governance to be exercised over the process of financialization, which in turn represents an important component in the construction of China's neo-statist authoritarian capitalism. These findings have broader implications for how we understand the importance of new financial technologies in an era of big data, contributing to contemporary debates in international political economy, economic sociology, and Chinese studies.

Keywords

Authoritarian capitalismChinadigital credit scoringtechnologyfinancializationneo-statism
Type
Article
Information
Finance and Society , Volume 5 , Issue 2 , 2019 , pp. 84 - 104
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NCCreative Common License - ND
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-No Derivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits noncommercial re-use, distribution, and reproduction in any medium, provided the original work is unaltered and is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.
Copyright
© 2019 The Author(s)

References

OlCaijing (2018) 2018 Report on the Development of China's Online Lending Service Industry [Chinese language]. Beijing: OlCaijing.Google Scholar
Aitken, R. (2007) Performing Capital: Toward a Cultural Economy of Popular and Global Finance. Basingstoke: Palgrave.CrossRefGoogle Scholar
Aitken, R. (2017) ‘All data is credit data’: Constituting the unbanked. Competition & Change, 21(4): 274–300.CrossRefGoogle Scholar
Ang, Y.Y. (2018) Autocracy with Chinese characteristics. Foreign Affairs, May/June: 39–48.Google Scholar
Bai, C. (2016) The origin and role of inclusive finance in China. China Development Gateway. Available at: <http://en.chinagate.cn/2016-06/06/content_38610696.htm>. Accessed 21 September 2018..+Accessed+21+September+2018.>Google Scholar
Barton, D., Chen, Y. and Jin, A. (2013) Mapping China's middle class. McKinsey Quarterly, 3: 54–60.Google Scholar
Botsman, R. (2017) Big data meets big brother as China moves to rate its citizens. WIRED UK. Available at: <https://www.wired.co.uk/article/chinese-government-social-credit-score-privacy-invasion>. Accessed 27 October 2017..+Accessed+27+October+2017.>Google Scholar
Bruff, I. (2014) The rise of authoritarian neoliberalism. Rethinking Marxism, 26(1): 113–29.CrossRefGoogle Scholar
Caixin (2016) Within P2P regulation ‘dual responsibility’ system the CBRC assumes responsibility for third party deposits [Chinese language]. Caixin, 24 August 2016.Google Scholar
Caixin (2017) Ant Financial's credit scoring ambitions crawl ahead with two new deals. Caixin Global, 10 May 2017.Google Scholar
Campbell-Verduyn, M., Goguen, M. and Porter, T. (2017) Big data and algorithmic governance: The case of financial practices. New Political Economy, 22(2): 219–36.CrossRefGoogle Scholar
CB Insights (2019) 2019 Fintech Trends to Watch. New York: CB Insights.Google Scholar
CBRC (2006) Guidelines on Commercial Banks’ Financial Innovation [Chinese language]. Beijing: China Banking Regulatory Commission.Google Scholar
CBRC (2016) Interim Law on the Management of Internet Lending Information Intermediaries [Chinese language]. Beijing: China Banking Regulatory Commission.Google Scholar
CFI (2016) How new credit scores might help bridge China's credit gap. Center for Financial Inclusion. Available at: <https://www.centerforfinancialinclusion.org/how-new-credit-scores-might-help-bridge-chinas-credit-gap>. Accessed 17 October 2018.. Accessed 17 October 2018.' href=https://scholar.google.com/scholar?q=CFI+(2016)+How+new+credit+scores+might+help+bridge+China's+credit+gap.+Center+for+Financial+Inclusion.+Available+at:+.+Accessed+17+October+2018.>Google Scholar
Chen, G. (2016) Use big data thinking and methods to enhance the government's governing capacity [Chinese language]. Qiushi, 12:15–18.Google Scholar
Chen, L. (2016) From fintech to finlife: The case of fintech development in China. China Economic Journal, 9(3): 225–39.CrossRefGoogle Scholar
Cheng, O. (2018) Inclusive Growth and E-Commerce: China's Experience. Hangzhou: AliResearch.Google Scholar
Chong, K. (2018) Best Practice: Management Consulting and the Ethics of Financialization in China. Durham, NC: Duke University Press.Google Scholar
Christophers, B. (2014) From Marx to market and back again: Performing the economy. Geoforum, 57 (November): 12–20.CrossRefGoogle Scholar
Christophers, B. (2015) The limits to financialization. Dialogues in Human Geography, 5(2): 183–200.CrossRefGoogle Scholar
Claessens, S., Frost, J., Turner, G., and Feng, Z. (2018) Fintech credit markets around the world: Size, drivers and policy issues. BIS Quarterly Review, September: 29–49.Google Scholar
CNTV (2016) PBOC sets up advisory body. CNTV, 26 March. Available at: <http://english.cntv.cn/2016/03/26/VIDEK0JJSIzIFLaMsCd9gkQE160326.shtml>. Accessed 13 September 2016..+Accessed+13+September+2016.>Google Scholar
Coombs, N. (2016) What is an algorithm? Financial regulation in the era of high-frequency trading. Economy and Society, 45(2): 278–302.CrossRefGoogle Scholar
Creemers, R. (2017a) Cyber China: Upgrading propaganda, public opinion work and social management for the twenty-first century. Journal of Contemporary China, 26(103): 85–100.CrossRefGoogle Scholar
Creemers, R. (2017b) Cyber-Leninism: The political culture of the Chinese internet. In: Price, M. and Stremlau, N. (eds.) Speech and Society in Turbulent Times. Cambridge: Cambridge University Press, 255–73.Google Scholar
Creemers, R. (2018) China's social credit system: An evolving practice of control. SSRN Papers, 3175792. Rochester: Social Science Research Network.Google Scholar
Dal Maso, G. (2015) The financialization rush: Responding to precarious labor and social security by investing in the Chinese stock market. South Atlantic Quarterly, 114(1): 47–64.CrossRefGoogle Scholar
Davis, A. and Walsh, C. (2017) Distinguishing financialization from neoliberalism. Theory, Culture & Society, 34(5-6): 27–51.CrossRefGoogle Scholar
Davis, G.F. and Kim, S. (2015) Financialization of the economy. Annual Review of Sociology, 41(1): 203–21.CrossRefGoogle Scholar
Dickson, B. (2008) Wealth into Power: The Communist Party's Embrace of China's Private Sector. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Dong, T. (2017) Quick take: JD.com finance unit launches microlending in Chongqing. Caixing Global, Available at: <https://www.caixinglobal.com/2017-10-19/101158477.html>. Accessed 20 October 2017..+Accessed+20+October+2017.>Google Scholar
ECNS (2015) China to issue guidelines for web finance companies. Available at: <http://www.ecns.cn/business/2015/03-05/156739.shtml>. Accessed 5 March 2018..+Accessed+5+March+2018.>Google Scholar
Elliott, D. and Yu, Q. (2015) Reforming Shadow Banking in China. Washington, DC: Brookings Institution.Google Scholar
Epstein, G.A. (2005) Financialization and the World Economy. Cheltenham: Edward Elgar.Google Scholar
Erturk, I., Froud, J., Johal, S., Leaver, A. and Williams, K. (2013) (How) do devices matter in finance? Journal of Cultural Economy, 6(3): 336–52.CrossRefGoogle Scholar
Feng, E. (2017) Chinese tech groups display closer ties with Communist Party. Financial Times, 10 October.Google Scholar
Feyzioğlu, T. (2009) Does good financial performance mean good financial intermediation in China? IMF Working Papers, 09/170. Washington, DC: International Monetary Fund.Google Scholar
Gabor, D. and Brooks, S. (2016) The digital revolution in financial inclusion: International development in the fintech era. New Political Economy, 22(4): 423–36.Google Scholar
Gonzalez, F. (2015) Where are the consumers? ‘Real households’ and the financialization of consumption. Cultural Studies, 29(5-6): 781–806.CrossRefGoogle Scholar
Goodman, D.S.G. (2014) Middle class China: Dreams and aspirations. Journal of Chinese Political Science, 19(1): 49–67.CrossRefGoogle Scholar
Gruin, J. (2013) Asset or liability? The role of the financial system in the political economy of China's rebalancing. Journal of Current Chinese Affairs, 42(4): 73–104.CrossRefGoogle Scholar
Gruin, J. (2016). The social order of Chinese capitalism: Socio-economic uncertainty, Communist Party rule and economic development, 1990-2000. Economy and Society, 45(1): 24–50.CrossRefGoogle Scholar
Gruin, J. (2019) Communists Constructing Capitalism: State, Market, and the Party In China's Financial Reform. Manchester: Manchester University Press.Google Scholar
Hall, S. (2012). Geographies of money and finance II: Financialization and financial subjects. Progress in Human Geography, 36(3): 403–11.CrossRefGoogle Scholar
Hansen, H.K., and Porter, T. (2017) What do big data do in global governance? Global Governance, 23(1): 31–42.CrossRefGoogle Scholar
Heath, T.R. (2016). China's New Governing Party Paradigm: Political Renewal and the Pursuit of National Rejuvenation. Surrey: Ashgate.CrossRefGoogle Scholar
Heilmann, S. (2005) Regulatory innovation by Leninist means: Community party supervision in China's financial industry. The China Quarterly, 181 (March): 1–21.CrossRefGoogle Scholar
Heilmann, S. (2008) Policy experimentation in China's economic rise. Studies in Comparative International Development, 43(1): 1–26.CrossRefGoogle Scholar
Hoffman, S. (2017) Programming China: The Communist Party's Autonomic Approach to Managing State Security. Berlin: Mercator Institute for Chinese Studies.Google Scholar
Hornby, L. (2017) China changes tack on ‘social credit’ scheme plan. Financial Times, 4 July.Google Scholar
Hsiao, C., Shen, Y. and Bian, W. (2015) Evaluating the effectiveness of China's financial reform: The efficiency of China's domestic banks. China Economic Review, 35: 70–82.CrossRefGoogle Scholar
Hsu, S., Li, J. and Xue, Y. (2014). Shadow banking and systemic risk in China. Political Economy Research Institute Working Paper 349. Amherst: Political Economy Research Institute.Google Scholar
Hu, B. and Zheng, L. (2016). China's shadow banking system - Scale, risks and regulation: Research from the perspective of non-traditional credit financing. In: Hu, B., Zheng, L. and Yin, Z. (eds.) Development of China's Financial Supervision and Regulation. Abingdon: Palgrave MacMillan, 1–29.Google Scholar
Huang, Y., Shen, Y., Wang, J. and Guo, F. (2016) Can the internet revolutionise finance in China? In: Song, L., Garnaut, R., Fang, C., and Johnston, L. (eds.) China's New Sources of Economic Growth: Reform, Resources, and Climate Change. Canberra: ANU Press, 115–38.Google Scholar
Huang, Z., Lei, Y. and Shen, S. (2016) China's personal credit reporting system in the Internet finance era: Challenges and opportunities. China Economic Journal, 9(3): 1–16.CrossRefGoogle Scholar
Jia, L, and Winseck, D. (2018) The political economy of Chinese internet companies: Financialization, concentration, and capitalization. International Communication Gazette, 80(1): 30–59.CrossRefGoogle Scholar
Karwowski, E., and Stockhammer, E. (2017) Financialisation in emerging economies: A systematic overview and comparison with Anglo-Saxon economies. Economic and Political Studies, 5(1): 60–86.CrossRefGoogle Scholar
Kshetri, N. (2016) Big data's role in expanding access to financial services in China. International Journal of Information Management, 36(3): 297–308.CrossRefGoogle Scholar
Langley, P. (2007) Uncertain subjects of Anglo-American financialization. Cultural Critique, 65(1): 67–91.CrossRefGoogle Scholar
Li, K. (2014) 2014 Government Work Report [Chinese language]. Beijing: State Council of the PRC.Google Scholar
Li, S.Y. and Tin, C.Y. (2016) Impact of technology on China's financial system. In: Sheng, A. and Soon, N.C. (eds.) Shadow Banking in China: An Opportunity for Financial Reform. Hoboken, NJ: Wiley, 171–94.Google Scholar
Lieber, A. (2013). The Chinese ideology: Reconciling the politics with the economics of contemporary reform. Journal of Chinese Political Science, 18(4): 335–53.CrossRefGoogle Scholar
Loubere, N. (2017) China's internet finance boom and tyrannies of inclusion. China Perspectives, 2017/4: 9-18. Available at: <http://journals.openedition.org/chinaperspectives/7454>. Accessed 22 November 2019.Google Scholar
Ma, W. (2017) China's Mobile Economy: Opportunities in the Largest and Fastest Information Consumption Boom. Sussex: Wiley.Google Scholar
MacKinnon, R. (2011) China's ‘networked authoritarianism’. Journal of Democracy, 22(2): 32–46.CrossRefGoogle Scholar
Mader, P. (2016) Card crusaders, cash infidels and the holy grails of digital financial inclusion. Behemoth: A Journal on Civilisation, 9(2): 50–81.Google Scholar
Martin, R. (2002) Financialization of Daily Life. Philadelphia, PA: Temple University Press.Google Scholar
McNally, C. (2012) Sino-capitalism: China's reemergence and the international political economy. World Politics, 64: 741–76.CrossRefGoogle Scholar
Mehrling, P. (2017) Financialization and its discontents. Finance and Society, 3(1): 1–10.CrossRefGoogle Scholar
MGI (2017) China's Digital Economy: A Leading Global Force. Shanghai: McKinsey Global Institute.Google Scholar
Millward, S. (2016) China lacks a US-style credit scoring system. But big data and AI are filling the gap. Tech in Asia, 18 July. Available at: <https://www.techinasia.com/baidu-china-credit-score-system-ai-big-data>. Accessed 22 September 2016..+Accessed+22+September+2016.>Google Scholar
Modell, S. and Yang, C.L. (2018) Financialisation as a strategic action field: An historically informed field study of governance reforms in Chinese state-owned enterprises. Critical Perspectives on Accounting, 54 (July): 41–59.CrossRefGoogle Scholar
Muniesa, F., Millo, Y. and Callon, M. (2007) An introduction to market devices. The Sociological Review, 55(2): 1–12.CrossRefGoogle Scholar
NDRC (2016) Credit Information Catalogue of the National Credit Information Sharing Plaform (Interdepartmental Joint Membership Conference Unit 2016 Edition [Chinese language]. Beijing: National Development and Reform Commission.Google Scholar
NIFA (2016) Internet finance industry credit information sharing platform launched. Available at: <http://www.nifa.org.cn/nifaen/2955875/2955895/2964303/index.html>. Accessed 17 September 2018..+Accessed+17+September+2018.>Google Scholar
Ohlberg, M., Ahmed, S. and Lang, B. (2017) Central Planning, Local Experiments: The Complex Implementation of China's Social Credit System. Berlin: Mercator Institute for Chinese Studies.Google Scholar
PBOC (2015a) Report on the Construction and Operation of the Credit System (2004-2014) [Chinese language]. Beijing: People's Bank of China.Google Scholar
PBOC (2015b) Guiding Proposal on Promoting the Healthy Development of Internet Finance [Chinese language]. Beijing: People's Bank of China.Google Scholar
PBOC and NDRC (2017) Notice Concerning Issuing the Name List of the First Group of Social Credit System Construction Model Cities [Chinese language]. Beijing: People's Bank of China and National Development and Reform Commission.Google Scholar
PwC (2015) Banking and Finance in China: The Outlook for 2015. Hong Kong: Price Waterhouse Coopers.Google Scholar
Rethel, L. (2011). Whose legitimacy? Islamic finance and the global financial order. Review of International Political Economy, 18(1): 75–98.CrossRefGoogle Scholar
Richards, N.M. and King, J.H. (2013). Three paradoxes of big data. Stanford Law Review Online, 66: 41–46.Google Scholar
Shen, W. (2016) Shadow Banking in China: Risk, Regulation and Policy. Cheltenham: Edward Elgar.Google Scholar
State Council of the PRC (2014) Notice of the State Council on the Planning Outline for the Construction of a Social Credit System [Chinese language]. Beijing: State Council of the People's Republic of China.Google Scholar
State Council of the PRC (2015a) Several Proposals of the State Council on Progressing the Healthy Development of Capital Markets [Chinese language]. Beijing: State Council of the People's Republic of China.Google Scholar
State Council of the PRC (2015b) State Council Guiding Opinions Concerning Vigorously Moving Forward the ‘Internet Plus’ Plan [Chinese language]. Beijing: State Council of the People's Republic of China.Google Scholar
State Council of the PRC (2016) Plan for Advancing Financial Inclusion Development (2016-2020) [Chinese language]. Beijing: State Council of the People's Republic of China.Google Scholar
State Council of the PRC (2017) Notice of the State Council on the 13th Five-Year Plan for Market Supervision [Chinese language]. Beijing: State Council of the People's Republic of China.Google Scholar
STCN (2018) The war on the cloud has started! Regulators lead 16 financial institutions in the construction of a unified financial cloud [Chinese language]. Securities Times, 8 March.Google Scholar
Tang, T., Zhang, Y. and He, D. (2014) The Rise of Digital Finance in China: New Drivers, New Game, New Strategy. Hong Kong: Boston Consulting Group.Google Scholar
Thornton, P. (2007) Disciplining the State: Virtue, Violence, and State-Making in Modern China. Cambridge, MA: Harvard University Press.Google Scholar
Tsai, K. (2007) Capitalism Without Democracy: The Private Sector in Contemporary China. Ithaca, NY: Cornell University Press.Google Scholar
Tsai, K. (2013) China's political economy and political science. Perspectives on Politics, 11(3): 860–71.CrossRefGoogle Scholar
Tsai, K. (2015) The political economy of state capitalism and shadow banking in China. Issues & Studies, 51(1): 55–97.Google Scholar
Tsai, K. (2017) When shadow banking can be productive: Financing small and medium enterprises in China. Journal of Development Studies, 53(12): 2005–28.Google Scholar
Tsai, W.H. (2016) How ‘networked authoritarianism’ was operationalized in China: Methods and procedures of public opinion control. Journal of Contemporary China, 25(101): 731–44.CrossRefGoogle Scholar
Van der Zwan, N. (2014) Making sense of financialization. Socio-Economic Review, 12(1), 99–129.CrossRefGoogle Scholar
Wang, J. (2017) ‘Stir-frying’ internet finance: Financialization and the institutional role of financial news in China. International Journal of Communication, 11: 22.Google Scholar
Wang, J. (2018) Inclusion or expulsion: Digital technologies and the new power relations in China's ‘Internet finance’. Communication and the Public, 3(1): 34–45.CrossRefGoogle ScholarPubMed
Wang, Y. (2015) The rise of the ‘shareholding state’: Financialization of economic management in China. Socio-Economic Review, 13(3): 603–25.CrossRefGoogle Scholar
Xia, B. and Fuchs, C. (2016) The financialisation of digital capitalism in China. Westminster Advanced Studies, 4: 1–32.Google Scholar
Xiang, X., Zhang, L., Wang, Y. and Huang, C.X. (2017) China's path to fintech development. European Economy, 2: 143–59.Google Scholar
Xie, P., Zou, C.W. and Liu, H. (2014) Internet Finance Handbook [Chinese language]. Beijing: Renmin University of China Press.Google Scholar
Xie, P. (2016a) Internet Finance in China. Abingdon: Routledge.Google Scholar
Xie, P. (2016b) The fundamentals of internet finance and its policy implications in China. China Economic Journal, 9(3): 240–52.CrossRefGoogle Scholar
Xinhua (2018a) Social Credit System Construction Demonstration Cities, Introduction of Typical Experience No. 11: Yiwu Municipality [Chinese language]. Xinhua, 6 February. Available at: <http://credit.xinhua08.com/a/20180214/1748625.shtml>. Accessed 16 May 2018..+Accessed+16+May+2018.>Google Scholar
Xinhua (2018b) China approves personal credit platform for online lending. Xinhua, 22 February. Available at: <http://www.xinhuanet.com/english/2018-02/22/c_136991905.htm>. Accessed 16 May 2018..+Accessed+16+May+2018.>Google Scholar
Yan, Q. and Li, J.H. (2014) Research on China's Shadow Banking Regulation [Chinese language]. Beijing: Renmin University of China Publishing House.Google Scholar
Yang, D. (2006) Economic transformation and its political discontents in China: Authoritarianism, unequal growth, and the dilemmas of political development. Annual Review of Political Science, 9: 143–64.CrossRefGoogle Scholar
Yang, D. (2017) China's troubled quest for order: Leadership, organization and the contradictions of the stability maintenance regime. Journal of Contemporary China, 26(103): 35–53.CrossRefGoogle Scholar
Yang, F. (2016) China's National Internet Finance (fintech) Association finally launches credit scoring system. Kapron Asia, 14 September. Available at: <https://www.kapronasia.com/china-banking-research-category/china-s-national-internet-finance-fintech-association-finally-launches-credit-scoring-system.html>. Accessed September 27, 2016.. Accessed September 27, 2016.' href=https://scholar.google.com/scholar?q=Yang,+F.+(2016)+China's+National+Internet+Finance+(fintech)+Association+finally+launches+credit+scoring+system.+Kapron+Asia,+14+September.+Available+at:+.+Accessed+September+27,+2016.>Google Scholar
Zhang, S. and Ruwitch, J. (2018) Exclusive: Ant Financial shifts focus from finance to tech. Reuters, 5 June.Google Scholar