When COVID-19 struck China in late December 2020, the government took drastic steps to contain the virus, including social isolation and lockdowns. This resulted in a significant drop in offline economic activity, particularly in restaurants, hotels, movies, parks, and retail stores. In the meantime, online economic activity such as e-commerce and virtual learning programs grew significantly. Many restaurants began providing door-to-door courier services, and the digital economy or business, because of its contactless nature, played a key part in macroeconomic stabilization.
Digital Wave Hits and Transforms
This really is one illustration of how digital technology, including various digital platforms, huge data, artificial intelligence (AI) and cloud computing, is transforming the Chinese economy or keeping it stable. Alibaba’s Taobao, China’s first e-commerce site, was founded in June 2003, a month before the World Health Organization pronounced the SARS pandemic to be under control. However, it wasn’t until 2013 when smartphones, tablets and cellular technology networks were widely accessible that e-commerce took off. Prior to then, internet shopping was mostly based on desktop computers and 2G wireless networks, resulting in a less than pleasant user experience unlike nowadays where e-commerce systems and platforms are used widely and every single one of them is optimized to give the users a pleasant experience. This is due to advancements in digital technology in the world. Thanks to the growing internet technology that is available in all countries. Want to apply for an internet plan? which offers a pleasant user experience.
By the end of 2019, online shopping has surpassed one-quarter of overall retail sales in China.
Alibaba had to tackle one main barrier in order to promote e-commerce growth which is online payment. It was difficult to complete internet transactions due to a lack of trust between buyers and sellers. Alipay, the world’s biggest mobile payment service provider, was founded by Alibaba at the end of 2004. Alipay has 1.2 billion users by the middle of 2019. WeChat Pay which is a payment platform integrated into a social platform called WeChat is Alipay’s major competitor, premiered on the social media platform in 2013. During the Chinese New Year in 2014, WeChat Pay drew a huge number of users by offering electronic red envelopes. WeChat Pay reached 900 million users by the middle of 2019. The WeChat red envelope is based on the
The Chinese tradition of hongbao (red envelope, or red packet), where money is given to family and friends as a gift. In China, mobile payment is by far the most popular financial technology (fintech) product. The digital economic operations that helped maintain the macroeconomic stability during the COVID-19 epidemic would not have happened if it hadn’t been for it. The most significant contribution of mobile payments, however, is financial inclusion, which dramatically expands access to individuals who have been excluded from traditional financial institutions. Banking and other financial services can be accessed from anywhere with a smartphone and a telecom signal. According to several studies, when farmers begin to use cell phones, they are more productive. People’s lives have changed dramatically as a result of technological advancements. Taobao (e-commerce) Villages are assisting rural residents in gaining access to the digital economy. The Greater Bay Area, which connects Shenzhen, Hong Kong, Macau, Foshan, and Guangzhou in Guangdong Province in south China, take advantage of the region’s technological superiority. In addition, the Guangdong province administration has published ‘digital governance’ rules, in keeping with the times.
Incorporating Technology into Financial Managements
In this modern century, Alipay and WeChat Pay are no longer simply payment platforms; they’ve created whole ‘ecosystems’ around them. Users may use these ecosystems to organize their everyday life, such as booking hotels, calling cabs, purchasing airline tickets, ordering food delivery, and so on. By building a new biotech credit risk management system, several significant-tech organizations, such as Ant (Alibaba’s fintech arm) and Tencent (the company that founded WeChat), began to issue credit. platforms and data credit risk assessment are the two aspects of this approach. In three aspects, Chinese big tech platforms like Taobao/Alipay and WeChat/WeChat Pay are crucial. First, they assist in the acquiring of huge numbers of clients at a minimal cost by using the platforms’ long tail characteristic. Second, they track customers’ digital footprints and collect all of that user data to provide real-time monitoring of prospective borrowers’ actions, which serves as the basis for credit risk assessments. Finally, they may be able to assist with debt management. Huge tech organizations could give credit to a large population and small, medium-sized enterprises (SMEs), the majority of whom have never borrowed from a bank, thanks to the combination of big tech platforms and huge amounts of data credit risk evaluation. MYbank, an Ant-affiliated lender, features a ‘3-1-0’ business model which takes just under three minutes to register online which is (3), and if accepted, the funds are sent to the applicant’s account in one second which is (1) with no human or zero human interaction which is indicated by (0). Each of the three Chinese huge tech lenders will be able to offer more than 10 million loans each year as a result of this arrangement. More notably, their average non-performing credit percentage is less than 2%, compared to 5.5 per cent for SME loans from commercial banks. During the COVID-19 crisis, big tech credit was also a driving force behind China’s somewhat more steady economic activity. The removal of the ‘financial accelerator is another significant contribution to macroeconomic stability.
Final verdict on China’s digital civilisation
China is becoming more linked to the rest of the globe, and its digital footprint is growing. Many non-Chinese people use WeChat, while Alipay, Tik Tok, and Huawei phones are popular in many regions of Asia. Regions, cities, and individuals in China are becoming linked via digital platforms. As Asians grow increasingly reliant on Chinese platforms, skills, and algorithms, China’s digital civilisation is likely to solidify. However, the digital revolution is still in its early stages, and it will require time to fully appreciate its economic implications. While some of the advantages are self-evident, digital technology also poses challenges for marginalized populations.