Reading news about Chinese banks can induce cognitive dissonance: Today, they are all about to collapse because of bad debts; tomorrow, they’re in a fine state and poised to profit from the coming consumption boom! Two of the most respected names in financial journalism this week illustrated the difficulty of reaching grand conclusions about the Chinese economy.
The Financial Times published a story (paywall) by Don Weinland titled “China’s traditional banks lose branding ground to internet rivals.” Its thesis is that “younger customers are choosing a bank on how convenient its app appears,” meaning that internet companies like Tencent and Alibaba have a huge advantage both in terms of brand and development of apps. Other new digital rivals that are chipping away at the dominance of traditional banks include peer-to-peer (P2P) lending and investment platforms, which allow users to crowdsource their financial needs, or to invest by giving interest-bearing loans directly to companies and individuals.
On the other hand, Bloomberg has an article by Nisha Gopalan titled “Fintech no threat for China’s big banks,” which says that the share prices of China’s traditional banks are being weighed down by concerns about bad loans and fears of tech companies like Alibaba and Tencent. However, Gopalan says that “investors shouldn’t worry” — bad debt figures are coming down, and the banks retain a central role in most people’s financial lives because bank accounts are where most people’s salaries are paid.
The FT and Bloomberg articles are not contradictory. Rather, they signal different things that will both probably happen: China’s internet companies are going to play a growing role in banking and finance, but whatever happens, the government will never allow private sector technology companies to replace the big state banks.
Tech titans in China take their battle to a new frontier / Bloomberg
“After slugging it out in ride-hailing, bike rentals and food delivery, the battle between China’s technology giants is spilling over into the travel sector.”
The closest look yet at Chinese economic engagement in Africa / McKinsey
Data from a survey, including “on-site interviews with more than 100 senior African business and government leaders, as well as the owners or managers of more than 1,000 Chinese firms spread across eight African countries.”
In Paris, high-flying HNA Group shows off its ambitions / Financial Times (paywall)
HNA “kicked off what it dubbed Paris International Week, which among other things will see HNA as the lead sponsor of the Open de France golf tournament.” HNA’s aircraft leasing group Avolon also signed a memorandum of understanding at the Paris Air Show last week “to purchase 75 Boeing 737 planes, with an option to buy a further 50.”
Alibaba puts another $1 billion into Lazada / TechNode
“Alibaba Group is to invest almost another $1 billion in Southeast Asian e-commerce platform Lazada, bringing Lazada’s implied valuation up to $3.15 billion.”
Security clampdown in far-western China exacts toll on businesses / NYT (paywall)
“Roadblocks and stringent security checks” across Xinjiang, including at restaurants, hotels, and shops, are making it difficult to move around and to do business in the region.
- Higher pay could mean ‘made in China’ equals ‘made by robots’ / Bloomberg
- AI will boost global GDP by nearly $16 trillion by 2030 — with much of the gains in China / Quartz