in China, these draft regulations goes through many rounds of discussions with government regulators, law makers, and industry stakeholders. There is no way the regulator just popped these out of blue. What extremely likely happened Jack ma, other executives, banks have been discussing and debating about this for a while. Since 2019 Ant has tried to claim they are technology company and they make technology to improve financial services, and they shouldn't be regulated as banks. I tend to think that Ant's approach with big data and having more data on the borrowers' spending habits do allow them to mitigate risks. But on the other hand, the leverage is still very risky. It can be said that an algorithm cant predict everything that goes in the future. What if a black swan event like COVID19 happened and the macro economics goes to shit in a sudden and all your consumers can't pay back the credit. Also keep in mind that a lot of Ant' borrowers are individuals, young adults, and uses it like credit cards. But unlike the US, China doesn't have strong credit score system. And taking credit on Ant doesn't require strict employment vetting, or asking if you own a house that you get when you apply for a credit card in the US. I think COVID19 and the sudden economy collapse also made the regulators realize how much danger there could be and compelled them to push out the rules.
Regulator's point of view is safety by design. Ant can fuck up something like the risk management process and still won't go bankrupt and take the financial sector with it if there is sudden adverse event. Jack Ma thinks its about innovation and he and his company alone can mitigate the risks and the society and the government should just trust them to be the vanguard.
So Jack Ma has irreconcilable views with the government regulators. And he came out to present his views in that meeting. Its not that government saw his comments as challenge the government's authority or something. The regulators would have pushed out the new changes even if he didn't say anything.
Regulator's point of view is safety by design. Ant can fuck up something like the risk management process and still won't go bankrupt and take the financial sector with it if there is sudden adverse event. Jack Ma thinks its about innovation and he and his company alone can mitigate the risks and the society and the government should just trust them to be the vanguard.
So Jack Ma has irreconcilable views with the government regulators. And he came out to present his views in that meeting. Its not that government saw his comments as challenge the government's authority or something. The regulators would have pushed out the new changes even if he didn't say anything.