In 2024, China’s fintech landscape is playing an increasingly central role in its economic development, as the country continues to solidify its position as the world’s second-largest economy.
According to the World Bank, China’s GDP per capita now exceeds $12,700, making it the world’s second-largest economy by nominal GDP, just behind the US.
China’s economy is diverse, with leadership across various sectors, including manufacturing, agriculture, and financial services. Over time, its traditional lower-end manufacturing has shifted to more knowledge-intensive industries, with companies like Huawei becoming global technology leaders.
In the financial services sector, major institutions such as China Construction Bank, the Industrial and Commercial Bank of China (ICBC), Bank of China and Ping An Insurance dominate. While Hong Kong has long been a leading financial hub since its handover in 1997, other cities like Shanghai, Beijing, Shenzhen, and Guangzhou have emerged as major financial and commercial centres. Shanghai, in particular, is often regarded as China’s primary financial hub.
Through strategic economic planning, China has transformed from a closed, centralised economy into an open global player. Its 14th Five-Year Plan (2021 to 2025) focuses on high-quality, green development and places innovation at the heart of progress. This plan relies on the dual circulation strategy, promoting both domestic and international growth, alongside reforms aimed at improving living standards.
China is the world’s second largest economy behind the United States IMAGE SOURCE GETTY
Digital focus
China has embedded digital transformation into its national strategy through several key initiatives. One such initiative is the Digital Silk Road (DSR), launched in 2015, which aims to extend China’s digital expertise beyond its borders.
The government has also been proactive in supporting fintech growth. Its 2022-2025 Fintech Development Plan sets out to build a ‘digitalised, intelligent, green and fair’ fintech sector, focusing on eight key objectives, including the development of digital infrastructure and enhanced fintech governance.
China’s fintech ecosystem spans a variety of subsectors. It is a global leader in digital payments, particularly mobile payments. Other important subsectors include lending, insurtech, wealthtech, regtech, and peer-to-peer (P2P) lending. Enabling technologies such as artificial intelligence (AI), blockchain, and big data continue to drive innovation across the fintech landscape.
Fintech growth
Mainland China is home to at least 13 fintech unicorns, including major payment platforms like Alipay and WeChat Pay, wealthtech firm Lufax, and insurtech company ZhongAn Insurance.
Unlike the West, where the fintech market is more fragmented, a few dominant players control much of China’s fintech ecosystem. These include Ant Group (owner of Alipay and Yu’eBao), Tencent (owner of WeChat Pay), Lufax Holding, ZhongAn, and Baidu’s finance arm, Du Xiaoman Financial.
According to KPMG, Mainland China and Hong Kong accounted for half of the top ten fintech deals in the Asia-Pacific region during the first half of 2024.
China is now considered one of the world’s largest fintech markets. With over 1.4 billion people and a rapidly growing middle class, its dominance is clear. Digital adoption, already high before Covid-19, surged during the country’s strict pandemic policies, alongside a boom in e-commerce and financial inclusion efforts for individuals and SMEs.
For instance, Chinese retail web sales surpassed $2.1trillion in 2023, double that of the US. Online shopping made up nearly a third of all purchases in China that year.
Fintech adoption was already widespread by 2019, with 87 per cent of the digitally active population using at least one fintech service regularly. QR code payments are particularly popular, accounting for at least 90 per cent of mobile payments. Almost 70 per cent of consumers use WeChat Pay daily. Since 2018, China has also led the world in fintech investment, reaching $25.5billion that year – a 900 per cent year-on-year increase, representing over half of global fintech investments.
Crypto change
China banned cryptocurrencies like Bitcoin in 2021, shifting its focus to developing its own central bank digital currency (CBDC). The digital renminbi, or e-CNY, has been in development since 2014 and entered its pilot phase in 2019. By the end of June 2023, e-CNY transactions – primarily used for domestic retail payments – totalled 1.8 trillion yuan ($249.27billion), with 120 million digital wallets opened, according to the central bank. This year, Hong Kong SAR announced it would allow the pilot digital currency to be used in local shops.
Further collaborations are also underway. In November last year, the People’s Bank of China (PBoC) signed a memorandum of understanding with the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Macau to strengthen fintech cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area. This initiative provides a one-stop platform for pilot testing cross-boundary fintech projects, following a similar platform launched in 2022 between PBoC and HKMA.
Later this year, the major fintech trade show Sibos, organised by SWIFT, will be held in Beijing – its first event in the APAC region since 2018 in Sydney.
Fintech continues to drive growth in China, playing an increasingly significant role in the country’s broader economic development.
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