New research from J Capital Research suggests that the ongoing economic turmoil in the world’s largest economy (depending on the metric used) could force Chinese authorities to change course and reverse recent legislative easing and firmly leave financial markets in the control of government backed or supported institutions.
According to J Capital Research, a number of factors in addition to regulatory intervention like a rise in US interest rates, a reversion of capital inflows to outflows in China and the action of the country’s central bank to slash interest rates is causing an environment that might cause many domestic Chinese fintech firms to struggle in gaining consumer adoption and subsequent revenue. J Capital writes,
“It’s very likely that China’s e-commerce companies, far from representing the rise of consumption in China, are creatures of China’s Era of Capital and will fall like stars.”
According to Mercator Advisory Group’s own tracking of fintech financing in 2015, there have been a number of deals involving Chinese companies across different parts of the payments and banking landscape. However as J Capital points out the ongoing economic trouble and potential active participation of Chinese authorities could result in future problems for the fintech sector and sending venture capital firms elsewhere for investments.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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