Credit: VCG/Contributor

Jack Ma, co-chair of the United Nations High-Level Panel on Digital Cooperation, hailed internet finance as "the greatest innovation of the present era", in a speech delivered at the 2nd Smart China Expo (SCE) held in Chongqing, China on 26 August, 2019.

According to Ma, internet finance distinguishes itself from traditional finance by its power to serve more SMEs. It resembles a kind of drip irrigation technology in the sense that it empowers small individual enterprises to survive and grow.

Internet finance is impossible without a powerful credit system and a reliable risk-management system, both of which function on a strong database. "From its first days, P2P lending was just illegal fundraising platforms running on web pages. It is unreasonable to blame the whole of internet finance for each problem we meet."

Ma also agreed that finance depends on continual improvement to achieve maturity, as does technology. He rejected any definite link between improvement and risk, and warned of the possible dangers posed by improper, inappropriate or backward supervision.

Regarding the establishment of statistics bureaus required by many Chinese local authorities, Ma warned that we must guard against an inefficient scenario of too many documents, but too few policies. "The difference between a document and a policy should be noticed. While documents generally set limits and restrictions on people that prevent them from doing things, policies can encourage them to take action and push for new developments."

Ma also pointed out that China does, indeed, need the real economy for its future development in the digital era, but that we must be very clear on what defines it. "Though the real economy is built on an advanced manufacturing industry and a modernized service industry, the future driver of employment is not going to be manufacturing, but service, whose development hinges on the growth of finance."

He urged to preserve the role of finance in development of the real economy. "For past failures, finance itself should not be blamed. It is the industry participants that should be blamed for not using it well. I cannot imagine a real economy without a digital economy or virtual economy. It's our responsibility to ensure a safe, healthy development of the virtual and financial economy."

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This article was edited by the TMTPOST team. 

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