Private money fund Yu'ebao shakes China
- By Xu Peixi
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E-mail China.org.cn, March 7, 2014
Most of the major political events since the new Xi-Li administration came to power in 2013, including the currently ongoing Two Sessions, have been about how to deepen reforms so that more people can share the fruits of economic growth.
The word "deepen" is very tricky because it implies that earlier reforms have not necessarily led to satisfactory results. For instance, a newly released Gallup report revealed that the richest 2 percent and the poorest 60 percent of people in China each hold one fifth of the collective household income. That is why a Central Leading Group for Comprehensively Deepening Reforms was set up last year as a top framework to lead a re-reforming process. Now that a political promise has been made: deepening reform so more Chinese can benefit from the booming economy, the people are asking: Is the new administration serious about this or is this only lip service? How to regain reform momentum and where to apply leverage?
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Grassroots Internet financing instrument like Yu'ebao is now challenging vested interests in the conventional banking sector. |
To make sense of the nature of Yu'ebao, one can put it into a list of contrasting pairs. In terms of principles of organization, comparing the grassroots financing instrument Yu'ebao with China's banking giant ICBC (Industrial and Commercial Bank of China) is like comparing Wikipedia and the Encyclopedia Britannica. One is edited by the global elite and experts. The other allows itself to be written by ordinary people across the world. Other pairings can include Skype vs. China Mobile, Alibaba vs. Wal-Mart, Twitter vs. the People's Daily, and YouTube vs. China's state broadcaster CCTV. In the era of the Internet, these types of pairs embody two essentially different mindsets, though they appear to be close. That is why ICBC has online banking but can't operate like Yu'ebao. The latter represents a rising new financing power with a deeper connection with the grassroots in a critical sector of the world's largest emerging market.
