Absolutely brilliant. There's an entire untapped market of sub prime credit that will rack up a few dollars balance then be trapped in the minimum payment cycle forever. Very low risk and huge upside. I'm surprised this hasn't caught on in the US yet.
China doesn't have effective means of debt collection (the social credit system is supposed to change that, but it's not widely deployed yet) so the risk is currently just a few billion lost to debtors who default on their microloans.
Not withstanding the former part of your argument. The latter part is mistaking their current response with inability in a way that appeases the world and keeps the pseudo democratic facade believable, with actually being unable to control by force.
We haven’t seen yet whether they can or cannot. But if to judge by the fact China still is a country ruled by one party for decades, a position that was achieved by powerful quenching of dissent - I wouldn’t say it’s likely that they’re unable to deal with protesters. No matter the size.
Micro-loans actually seem better than the standard western practice of credit cards. With a credit card the individual never pays for their own transactions, they're completely sidelined then pay back the cost + more later. At least with a micro-loan the individual actually is involved and in control of the money.
When you say Western, you mean American. Almost nowhere in Europe is buying on credit the norm, but debit cards or credit cards that debit your bank account directly.
They're missing out on a useful feature of credit cards. If you get hit with a fraudulent transaction, you can dispute the charge to get it reversed. I have never tried this with a debit card, but the credit card companies make this much easier than dealing with your bank.
Also, if you pay the balance in full every month, you don't get charged interest.
If you're disciplined, then you'll use credit cards for every cashless purchase.
In Europe, banks handle these things for you, rather than an intermediary CC provider (although that is possible too). It's a misunderstanding if you thought there is no recourse whatsoever on European debit cards.
There is always recourse, it's just my understanding that it's easier with CC companies. And when you get hit with a charge, it's not immediately hitting your bank account. You can get hit with the charge, dispute it and get it reversed without ever having to pay out of your own pocket.
I think the main difference here is that it's way easier to get a CC charge than a debit charge. Anyone who happens to stumble upon your credit card information can try using it and cause a charge. If you want to cause debit charges you need to know a PIN number and physically have the card (since, afaik, chip&pin hasn't been cracked yet) or you need access to a second factor such as a TAN-code list.
Either system is a valid solution to the problem of fraudulent charges, both have their advantages and disadvantages.
I actually don't have a credit card. I have a debit card and I use it for everything I can. I NEVER have to enter a PIN except at the ATM. Web based transactions wouldn't know if I physically had the card.
The PIN requirement for usage must be a European thing.
> The PIN requirement for usage must be a European thing.
It is. Over here a credit and a debit card work in significantly different ways. In the USA (and probably other countries too) a debit card is just a credit card that's more likely to get declined and gets billed slightly differently. Over here they are entirely different transaction systems as far as I can tell.
Depends on your definition of fraudulent. If money is stolen out of your account or your card is cloned then you will get your money back with a debit card. If the restaurant overcharges you or you are not happy with your webshop purchase then the bank will not help you out.
It might be an added benefit but in the end you do pay a couple percent on each purchase for that insurance.
> If the restaurant overcharges you or you are not happy with your webshop purchase then the bank will not help you out.
I don't know what it's like in other European countries, but I have to enter my PIN code before a transaction can take place (except for very small transactions). So since overcharging or webshops charging my account cannot really happen without my explicit permission, I don't really see how that could happen?
You pay the couple of percent whether you use the credit card or not, since there is usually no discount for cash or debit.
On the other hand, a credit card will give you back 1-2% of that in the form of cash back or other rewards. So in effect you are paying to not use a credit card.
The statistics that I found on a quick google show pretty small differences in debit/credit split between the US and EU. EU just has more cash. (these numbers are self-reported through a survey though so may be unreliable)
(If it's 'type of payment method' owned: possible. But if it's volume of currency exchanging hands then it //really// mismatches with my experiences in US vs Northern EU)
That said, northern EU is the place where people don't remember exactly how cash looks like since everything is paid either with card or using an app. But northern EU is population-wise a rather small market.
Exactly, but most of those I would think of as "debit", albeit electronically. (RFID bank card, apple pay -- all do not route to a line of credit in Europe but to debit/checking accounts).
European CCs provided by banks are often direct debit. On top of that, having a CC as backup for travel is common too. Transaction volume will show a very different distribution.
What we call a credit card in Europe is usually a charge card: You have to pay back at the end of the month. Not paying will result in immediate closure of your account and sending the bill to collections. There is no option to transfer your debt to the next month.
FTA: "Borrowers don’t incur any interest unless they miss payment deadlines or sign up for installment plans."
So yes, this sounds exactly like a western style credit card, just with a micro-credit limit. You get X days of interest free credit, then pay interest if you take longer than that to pay (or set up a fixed payment plan, which some western cards also offer).
Credit card companies also make a huge amount of revenue from merchant fees. Every transaction carries a fixed and percentage-based fee. Often something like $0.29 + 2.5%.
Payment companies like Alipay have much lower fees to the merchant, from what I recall.
Maybe there are some differences concerning the dataprocessing on spending history/behaviour.
I know that credit card data is processed and sold, too. But maybe there micro loan data is less restricted for that kind of data business.
Credit cards give you a 30 day loan with no interest. Interest only starts on purchases after one bill cycle. What is the average duration of a microloan?
The smaller you make the loan, the more pointless it becomes for more and more of the population. For clarity, consider the extreme case: very few people would consider taking a loan of a penny, however many people would consider taking a load of $10,000. A penny is a negligible fraction of your earning power, so it makes more sense to wait 2 seconds at work than to spend 3 seconds taking out a penny loan (and I'm being generous to modern tech; it will take you longer than 3 seconds to take out a loan).
Credit cards acknowledge this issue by construction. They assume that there's some overhead (convenience, time, effort, etc.) with paying back a loan, so what they effectively do is allow you to batch transactions together and pay them all back at once. That way, you don't have to log in every time you make a purchase to "refill". Of course, if this "refill" has no overhead cost, then it wouldn't matter.
Right, but for anyone who has to keep a close eye on their balance (so excluding most HNers), the credit card UX makes it as easy as possible to be irresponsible and as difficult as possible to be responsible. That's why responsible poor people are sometimes willing to pay entire percentage points of their total spend (!) in order to use debit cards so that the balance check gets done at the point of sale.
> I don't know about yours, but my credit card is automatically paid off at the end of each month, so unless I run out of money I won't incur interest.
This, it's easy to set-up a direct debit to pay off the entire balance every month in the UK. Every major CC provider I've had a card with has supported it.
My credit limit is many times higher than the amount of money I keep in my current account and that's only for a single card. It's very, very easy to overspend on a credit card and after you've done it once it can be difficult to recover.
The entire financial world is designed to exploit people who are not very good with money.
> Right, but for anyone who has to keep a close eye on their balance (so excluding most HNers)...
Keeping a close eye on your balance is basic financial responsibility and maintaining situational awareness against the ever looming threat of fraud. It doesn't matter if you operate on a bank account with $10 or $100,000...if you're not actively accounting for your transactions, that's a personal flaw. The way how I see it: if you don't have the discipline to properly account for even the smallest expenses, you'll never be able to sustain wealth at any significant level.
Anecdotally, a recurring pet peeve encountered is when I'm not provided with a receipt for purchases by default. This happens more often than not at fast food joints and gas stations, and when kindly asked for one, I almost always receive a reaction of either dubious entitlement or disgusted inconvenience, highly correlated to which car I happened to take that day. Although this class of expense is in the noise with respect to my financial posture, I still track them with unwaivering vigilance and find it so ironic when a minimum wage cashier who probably struggles to make ends meet every week disrespects that little piece of paper which enables personal accountability. Stochastically speaking, many of us--including myself--come from humble beginnings.
Accounting for your transactions and watching a tight balance are two entirely separate activities, as different as day and night. One involves checking a list / notifications for fraud and the occasional exercise of self-control to stay within a reasonable budget. Easy peasy. The other involves frequent constraint solving and optimization, which explode in complexity as budgets get tighter and constraints get harder.
The latency built into modern tooling exacerbates the issue. Credit card apps, mint, etc are decent for accounting (or allow export to an app that is), but they are so bad for dealing with a tight budget that people resort to debit cards and hand-ledgers (under which I am including manual entry of amounts into an app). A sizable safety margin lets you tolerate latency and gives you access to modern, low-overhead, highly capable tooling. Also, the luxury of choosing your own budgets lets you dodge tons of constraint solving right off the bat.
> Stochastically speaking, many of us--including myself--come from humble beginnings.
Then surely you remember the massive cognitive unloading that came when you first built a safety margin, yes?
Even putting all of the above aside, I just don't have much faith in patronizing and finger-wagging as tools for social progress. Even if responsibly consuming credit were trivial at all income levels, I still would still object to business models that encouraged and monetized irresponsibility.
Why do you need the receipt itself for fast food or gas? I categorize transactions once a month based on the statements, if something looked crazy I’d dispute it (never has).
I do take photos of larger dining receipts, since errors can be made entering the tip after I’ve left. Usually anything over $75 I’ll take a photo.
Seems unnecessary to me to spend much time on the noise since I can see in aggregate if some behavior like eating out is problematic.
I don't know how it works in the US, but here in Europe we can see the amount we were billed on the card terminal and the shop isn't just able to go change it after the fact.
In the US, the terminal is not brought to the table. The tip amount is written on a paper receipt and entered by the clerk at a (usually) out-of-sight terminal, usually after you've left. A customer doesn't interact with a terminal at all.
This is one of the (many!) problems with how financial technology works in the US. Cards get an auth placed twice for the same bill (one without tip, one with tip), there's little to no card-based security in place when making purchases and customers don't get to hear about their transactions until many days have passed since the purchase.
Every time one of these discussions comes up, it always seems shocking how bad bank/card mediated transactions are in the US. It's as if you just give your open wallet to anyone. I've just moved to Europe and it feels like I've gone back in time a decade. I can't imagine what it must be like in the US.
I take photos of receipts to protect against those scenarios, I just don’t cross reference them unless something looks “off” when I categorize monthly.
I suppose I could have fallen victim a few times on tiny amounts never knowing, but in total couldn’t be more than $100 over the past several years. I also tip pretty well on smaller bills, so that probably reduces my exposure a bit.
I respect the discipline it takes to audit everything, but for me it doesn’t seem worth the effort.
I don't think you're likely to find too many micro-borrowers on this site.
We used to set up micro-finance co-ops in developing countries. The amount of seed money requested by borrowers was ridiculously small - $100 to set up a corner store in the front room of someone's home, $150 to buy some clothing wholesale and sell it retail door to door.
What we found was that the people who most need credit often just to make ends meet are the ones who are least likely to have access to it. So they resort to "village moneylenders" which is a nice way of saying loan sharks (whose interest rates just perpetuate the cycle). Compare that with people who are relatively rolling in cash who can play all sorts of games with multiple lines of credit and basically work the system in their favour.
I understand that the amounts seem absurdly small, but for some people "I have no money" literally means that they have $0.00, not "I only have a couple of hundred and my credit cards, overdraft, afterpay, etc to get me through to pay day"
It's pretty easy in those regions to lend so the fact that loansharks still dominate seems to indicate to me that they're lending to unreliable borrowers. i.e. that this is market equilibrium, you cannot compete on margin.
It's easy to lend anywhere. Where it gets complicated is when you're trying to borrow.
From my experience the popularity of loan sharks has a lot more to do with the fact that banks traditionally have seen no value in small, short term loans (which is basically what a credit card transaction is).
Interestingly enough, in many places where we worked and proved that "poor" does not necessarily equate to "unreliable" those same banks are starting to offer microcredit-like[1] loans, presumably because they've crunched the numbers and decided that the volume makes it a viable proposition even if the margin is thin.
[1] "Microcredit-like" because banks' offerings are obviously profit-oriented whereas traditional microcredit tends towards a community development focus
There are quite a lot of regulations surrounding lending in the "developed" world. It's not easy for you or I to just go out one day and set up shop trying to lend money.
It's only not easy if you intend to do it legally. If you don't, it's really easy. I mean like "you can start running payday loans with a paypal account, a reddit account, and 10 minutes to read an FAQ" level of easy: reddit.com/r/borrow
Some of the loans on the new page are over 4000% APR, and the lenders are (presumably, I don't actually know, but whatever) from the "developed" world.
The problem is lending is extremely expensive. The amounts people want to borrow are tiny, so the logistics involved themselves become a huge expense. Further, in many places where micro finance took off, there is a lack of ids, digital tracking, or even phones and addresses you can either contact or identify the borrowers by.
Micro finances genius was to offload enforcement costs to the community at large, and to focus lending to women.
Today where everyone has cellphones, a lot of the original expenses with lending to small scale borrowers have disappeared, and the cell phone itself becomes an ID.
> Today where everyone has cellphones, a lot of the original expenses with lending to small scale borrowers have disappeared, and the cell phone itself becomes an ID.
yeah... not so much in places where you can get a prepaid SIM card with no ID from the corner store for pennies.
I agree with your other points, though - only lending to women and only forming groups consisting of women from the same village/community are absolute bedrock requirements for getting microcredit to work
You can't get a SIM in China without showing & registering your ID, and you can't get access to payment facilities without additional verification (link to bank, referral from user, etc). There are of course ways around this, but they're non-trivial.
I mean, its not like markets reach equilibrium in an instant, or that financial education/operations are particularly robust in these communities. A more competitive lending market takes time to setup (i.e. to learn idiosyncratic risks) and some amount of operational overhead/expertise to run efficiently. Just because things are the way they are doesn’t mean they can’t change
> the people who most need credit often just to make ends meet are the ones who are least likely to have access to it
Is this not because the people can't afford to buy dinner today are equally unlikely (or even more so) to be able to afford to buy dinner and repay a loan tomorrow?
I think "the people who most need credit often just to make ends meet" fits into that first bracket. Anyone who's drowning just trying to keep up with absolute essentials needs help, not loans. If you can repay a loan then you can save. And if you can save, you shouldn't take out a loan.
Possibly "make ends meet" was a bad choice of words... there appears to be a gap between raw subsistence and the beginnings of social mobility that is quite hard to bridge. That's the spot that microfinance is aimed at - the great majority of these loans are used as seed money to begin/expand microbusineses.
> If you can repay a loan then you can save. And if you can save, you shouldn't take out a loan.
I wonder if you give this advice to people thinking of taking out a mortgage to buy a house. Or getting a loan to expand a small business. Or buying anything else on credit. It's quite easy to formulate the idea that poor people don't deserve credit, particularly when credit for you is so available you can't really imagine what it would be like for it not to be available.
There is quite a romantic idea that ignores many realities that if everybody works hard and saves their money they can "make something of themselves" and possibly give their kids a better life. The problem is that in many parts of the world if you work hard and save your money you may - if you are lucky and healthy - manage to stay in the same spot or else move imperceptibly up or down a degree. I don't think that's fair.
Unless you need the loan to generate income. Then you cannot first save (or it would take much longer)
Take the example of needing $ 100 to setup a small restaurant. You probably need tables, kitchen equipment and some ingredients. After you have those you can start selling food and over some time pay back the loan. Once the loan is paid back you have more profit leftover for yourself. So you've become less poor and more able to provide for your own future.
then they are not taking out a loan to make ends meet, but to start a business.
If they are borrowing money for food, and hoping to make it back in the future by working - that's making ends meet. And i agree, in this case, that they need help, not loans.
I haven’t used this or any other micro-borrowing service. But we’ve got over a decade‘a worth of failed microtransaction services in the West. I’m going to guess that this is a fantastic way to encourage traction with such a service. Want to spend a few cents here and there? Great! Get started and pay us later. Then when you’ve used that up they get your (bank) details and trust you with more and more credit, until they’re no longer micro-loans. And people buy all sorts of stuff (consumer goods) on credit, this much shouldn’t be a surprise.
at least in the US, micro-borrowing didn't take off because its already easy to get credit.
What is concerning is that micro-lending for e-commerce is taking off with services like affirm, which looks like a dangerous economic signal when people are using it to finance purchases under $100 dollars.
basically any major boost in micro-lending in the US would be a warning and not anything to celebrate.
Good points... And I commend you for staying on topic with that last paragraph.
Literally all of the warning lights are blinking (due to intentional neglect and corruption across the board), but the micro-lending bastion is safe for now.
I remember how anxious I was when, as a student, I didn’t know if a CC charge would be declined or if a debit charge that brought my account balance would fall to -$0.02, thus bringing the wrath of a $29 overdraft fee. The overdraft notice is also a distinctly anxiety-inducing letter.
Microloans are typically offered to people who are not eligible for larger, more traditional loans.
Also, some people who want expensive consumer goods do so for the feeling of the purchase and the feeling of accomplishment, but ignore the nagging reality that they haven’t actually accomplished the purchase until it is paid off.
A college student would not take a $7 microloan for convenience and satisfaction. The funny part here is that a college student should know how to keep a balanced ledger! But that's not the point, the point is that microloans are meant for developing countries where an established credit market is still forming (like many countries in Africa and Southeast Asia)
> The funny part here is that a college student should know how to keep a balanced ledger!
That's something I was taught neither by my parents, nor at any point through my schooling. It'd be great if folks had this kind of fiscal literacy; but where are we expected to gain that knowledge?
I've heard tell of "civics" courses, back in the day, that taught the basics of what adults are expected to know. But they're long gone now.
I think the point is that a college student should be able to figure it out on their own. I was never taught how to keep a ledger; I just decided one day to download GnuCash and enter all my transactions there. Maybe I'm actually doing it all wrong, but I think it's been quite helpful for planning my spending.
Personally, I believe the loss of civics, home ecs, and other courses of that nature is primarily because they are not curricula tied to standardized testing. With No Child Left Behind and more rigorous focus on standardized testing for everything from determining school funding to teacher performance, anything that wasn't STEM or reading has kind of got chucked out the window, and civics/home ec is the easiest candidate since it doesn't really pull any emotional strings like, say, cutting music classes.
When I was a child in the 2000s we literally had two weeks where the "normal" curricula went to the wayside and we did two weeks of test prep for the city and state exams. Then I show up to college and my roommates getting into the top medical schools need to be told how to fry an egg.
Are there no required classes like that in your state? I took a consumer economics class in high school just over a decade ago out of requirement and looking at the current curriculum for my high school still shows an Illinois consumer education requirement which can be satisfied by consumer economics, economics, AP macro, AP micro, Introduction to Family & Consumer Sciences or Introduction to Business.
We had an economics course that was mostly macroeconomics, which under this regulation would technically qualify this requirement, but IMO a class on macroeconomics is about as helpful to learning how to balance your accounts, as watching Iron Chef or Chopped is to learning how to cook meals in a college dorm room.
Yes every single day I micro borrow amounts as low as 2.99 to buy coffee. I pay these off with zero interest at the end of the month. It gives me a way to get what I want without having cash in hand. It’s great. Some micro loans even pay ME for taking them.
I use this "HuaBei". I wouldn't call it "borrowing". Actually the Ant-finance have another product called 'JieBei' which means 'just borrow'.
"HuaBei" works like the credit card, if you pay within the 1 month, you don't need to pay interest.
There are the following reasons encourage people to use this.
- 1) You get cheaper product (not a lot, but still cheap)
- 2) If you use this HuaBei and pay off on time, you'll get higher credit score which is called 'sesame credits'. With it, you can go to the hotel without paying in advance. Or you can use it as the finance statement when applying VISA.
- 3) Ant finance also have funds products. The most used one is 'YU'E bao'. It is monetary fund. The yearly interest rate for now is around 2.3%(used to 4%). You can deposit and withdraw any time. If I don't pay the product with debit but the "huabei", after 1 month I got more money.
In addition to cookie_monsta's answer, you also have to consider that a very sizable portion of microcredit borrowers live on a day-to-day or week-to-week budget. Often times income in will be lumpy whether from a paycheck every two or four weeks or because sales from their micro-business being lumpy as well (e.g. maybe they most of their money at the market on the weekend).
One factor is that it's easier to say "I'm paying back a loan" than saying "I need to buy new shorts". Keep in mind that loans and gifting are pervasive features of low income communities already.
- Convenience:
Having your payment info saved in Alibaba (or Jet,Walmart,Amazon etc) makes it easier to purchase & check out especially because you don't have to incur the financial consequences right away.
- Increased buying power & revenue:
The customers don't incur any finance charges. This allows them to purchase $14 worth of products while only paying $7 right away. The merchants that sell the products likely pay a transaction fee. As such, Ant/Alibaba can generate additional revenue from the increased sales and transaction fees.
Personally I believe any kind of consumer lending is bad. It is for consumption, it is for profit, and ultimately creating new liability for borrowers. Chinese companies are learning from west financial institute for this lucrative practice, which in long term is bad for Chinese economy. In short term, it may stimulate consumption. Also as a Alipay user, I didn't intend to have a Huabei account, it was created automatically, and all my purchases on Taobao go through it automatically. I didn't bother to change it. I believe most accounts are created this way.
Consumerism exists largely because of financing. It's pretty much essential for big-ticket purchases, which is why so many places in the West offer it for free.
You save up around €3000 to buy a second hand car, such as a 2010 Peugeot 207. After a while, you save up another €3000 and trade in the Peugeot 207 for a 2012 Renault Laguna. You repeat that a couple of times until you are able to afford a new car or until you are no longer able to upgrade to something better.
That is how hundreds of millions of people do it here in Europe.
(Yes, I'm a secondhand car person myself, but heavy car commuters tend to buy new or even lease because the quality of car affects the quality of life for hours a day)
False - if I needed a loan to buy a car so I could get to work that's worth it. The work pays off the loan over time, I'm left with an asset and it's a win win for me, my employer and the car salesman.
I have several problems with this and I'm concerned by the number of people promoting this as a good thing:
1. "Nearly half of Huabei's users are under the age of 30 [..]". There is value in teaching young people to budget well and save for what they want or need. There's this feeling of "hard earned, well looked after" with many of the items I personally own.
2. Whilst the intention is supposedly good, I feel as if this is really a move towards putting large amounts of the Chinese population into a debt for (mostly) meaningless purchases. This isn't somehow generating more money for the average person, this just traps them into borrowing from their future selves at a worse rate. This doesn't lift people out of poverty, if anything it traps them in it.
3. "As of June, 1.6% of Huabei's outstanding loans were more than 30 days past due, while 1.2% were more than 90 days overdue, according to a document for bond investors.". That's 1% overdue every month! They compare this to credit cards, but it's a false equivalency. People getting credit card loans a) typically plan to get something that will hold value and b) there are fewer of these loans approved.
And lastly:
""Only at the end of each month did I realize how much I've spent," Ms. Zhang said, adding she made many impulsive purchases on clothes and cosmetics because the credit was available to her. She said she has never been late with her repayments."
Therein is the major problem, people purchasing non-essential items without care because the money is readily available. If only she had waited just a single month she could have saved money, even whilst purchasing the same items.
Micro-loans could be mostly considered as a poor-people tax. A communist backed newspaper should know better.
Is it? People seem to be paying on time and aware of their spending habits as a result. I do wonder what the advantage is for using credit in China.
In the U.S. it offers another layer of security, flexibility, builds credit, and earns rewards compared to using debit or cash, and is interest free as long as you pay on time.
> People seem to be paying on time and aware of their spending habits as a result.
More than 1% aren't per month, every month - and the Chinese economy is currently relatively stable, imagine a 2008 happening to those people. Also remember that some people may be borrowing to pay off the previous short-term loan - or are at the very least stuck continuously having to borrow from their future selves just to keep things afloat, each pay check evaporating as soon as it comes in. There's going to be a lot of people now stuck in a dangerous loop of dependency on these short-term loans at the best.
> I do wonder what the advantage is for using credit in China.
I think the advantage is small when compared to disadvantage. The advantage is small - you could get a good friend to lend you $10 to see you through a particularly bad month. The advantage of a friend is that they'll also tell you when enough is enough, when it's ongoing, when they believe you're borrowing for the wrong reasons.
> In the U.S. it offers another layer of security,
This is just a band aid for a much worse problem - that the average person in the US is living pay-check to pay-check, without money saved.
> flexibility
This is literally the only good reason I can think of for it's existence, but it's almost impossible to filter for these people.
> builds credit
Again, this shouldn't need to be a thing.
> earns rewards compared to using debit or cash,
The fact that cards don't earn rewards is an oversight on their part. The bank I'm with has two accounts, one is "easy access" and one is "savings". I can transfer from one to the other very easily, but I can only pay out of the "easy access" directly. If I keep money in the "savings" account for a period of time, I am rewarded with high interest, i.e. I am rewarded for saving money.
Other shops in the local area also have "loyalty" cards which also reward purchases of certain items (it helps them predict what stock they will need and to shift excess stock if required, as well as collect data about customer purchasing habits).
> is interest free as long as you pay on time
Smoking is harmless as long as you only ever do it once. The point is that people get trapped and reliant on these loans, at a cost.
The reason it is being paid on time I assume is that many accounts are created for people never needed to borrow money, like my account. It was created automatically and my taobao purchases go through it if I don't choose to opt out(which I didn't do due to laziness). These rush to new gold mine in lending money to young people are very bad, Alibaba is probably a responsible player, but there are so many bad players now. I personally do worry about the future for young generations.
I think the parallel is not exploitative pay day loans but the western credit card. China is not as developed as the west when it comes to trust and identity. This causes credit mostly to be given to a few well established and well connected identities. And leaves China with a high savings rate. Changing that will unlock further growth and spread of wealth.
> "Lure" is a nice short word for "attract with incentives"
In american english, lure has negative connotations - like pedophiles luring children with candy or human traffickers luring vulnerable people with the false hope of a better life elsewhere.
I don't think people who read the headline came away with a positive view of Ant's $7 Credit Limit.
Do you think the headlines below leave the reader with a negative impression?
"FedEx lures sellers with two-day air shipping after Amazon contract ends"
"Cloudflare goes big on serverless with new CLI, lures devs with free tier"
"Shopping for nostalgia: Toys R Us lures Michigan fans to Canada"
"A ‘Honking Big’ Cave in Canada Lures Geologists to Its Mouth"
"North of Netherlands Lures Elon Musk with Billboards"
Is two-day air shipping bad for sellers? Is signing up for Cloudflare's free tier a mistake? Is Canada a dangerous country full of toys and geologist-swallowing caves? Will visiting the north of the Netherlands be the end of Elon Musk?
They are basically pushing a credit line in-app to half a billion users.
That's the wet dream of western credit card companies.
Sure in some perspective getting people not used to debt at all to easily overspend might be called empowering from a twisted neoliberal point of view.
It's such an imprecise word that it has become a way of showing distaste for something without offering specific criticism. Like in this instance-- what does a CCP backed company offering small, zero interest loans to its citizens have to do with Western left-of-center politics? I can't think of anything less "neoliberal", if anything it's communist.
Seeing everything from a US-centric view really not make sense here, since nothing comparable to this exists in America, and because microloans like this are a lot more meaningful to people in other parts of the world.
One of the cornerstones of neoliberalism as practiced in the US in the Clinton-era and beyond has been predatory lending disguised in a facade of laissez-faire feel-good marketing. Drawing a line between Jack Ma’s new lending scheme and that is a pretty specific criticism, even if you don’t agree with it.
But we're not talking about predatory payday loans, which are not even legal in China.
If you want to say that QE is "neoliberal" and that this is sort of like QE except bottom up instead of top down, I guess I could see your point although I would argue that it's convoluted because the bottom up vs. top down is a major distinction that no longer makes the two similar.
Also, I disagree that predatory lending is a cornerstone of the modern Democratic party, but that's neither here nor there.
That's par for the course when it comes to propaganda.
It's even worse when it comes to international news. How many times has china "conquered the middle east" or "colonized africa"? A lot more than you think if you follow the news.
"China's latest conquest: Middle East power broker - commentary"
When we actually invade and conquer the middle east, the media portrays it as "bringing freedom". When we actually colonize africa, the media portrays it as "aid".
Of course it isn't just the west spreading propaganda, china does it also. It's why it comes to geopolitical or controversial events, you need a wide variety propaganda to get as honest an assessment as possible because every side lies about something and is honest about other things.
I don't have anything to say about whether or not the article is anti-China propaganda, but I just wanted to address this comment because there's some underlying assumptions being made here about names and ethnicity.
In this day and age, I don't think a name is guaranteed to tell you much about a person. It's a bit fallacious to say "she has a Chinese name, so she's probably not against China."
She could be from Taiwan or Hong Kong, both of which have plenty of reasons not to like China. She could also have been born and raised by Chinese, Taiwanese, or Hong Kong parents in any other country.
I have an incredibly "white" name, but I'm ethnically Korean. I know I'm an outlier, but it gives me first-hand knowledge that using names to assume things about people's ethnicity (and from that, their beliefs) is not a good tactic.
Ant Financial is owned by Alibaba and Jack Ma. Alibaba is founded and owned by various communist party members. Jack Ma is a communist party member. Ant Financial is essentially co-owned by the Chinese Communist Party.
In order to encourage a failing economy, trap more consumers in debt (China has an outrageous 400%+ total debt to gdp) and prevent unrest, CCP is giving a $7 credit limit to its 700M people in poverty. Whether it works or not is debatable, as Chinese consumers are already neck deep in debt and hurting from rising inflation
There are close to 100 million CCP members, and virtually every successful businessman in China is a member. Alleging that this app is some deep conspiracy by CCP top brass is both unlikely and unhelpful, especially given that the Party has been clamping down on loans elsewhere.
Or maybe successful businessmen just want to buy influence in what ever system they are operating.
In a democracy you donate or lobby parliament, in a one party system you become part of the party to get closer to the people in power. Seems pretty smart of businessmen if you ask me, not saying i'm condoning that behavior. But then again im not a successful businessman.
No, I'm just saying membership is a logical step to take for every Chinese businessman, and doesn't imply very much about their actual ideology or the degree to which their actions are dictated by the party.
