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IN WITH THE OLD

China’s fancy fintech firms are still beholden to old-school banks—and the Communist Party

Fraser Howie and co-author Carl Walter wrote Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise, a seminal book on the creation of China’s state-owned banking behemoths. Howie thinks the country’s fintech upstarts like Ant Financial, for all of their newfound clout, are still beholden to the brittle foundation of their old-economy predecessors.

Howie was an equity derivatives trader at Morgan Stanley in Hong Kong, and moved to China in 1998 to work for China International Capital Corporation. His book describes state-owned banks that look like capitalist institutions on the outside, but are tools of the Communist Party’s power. Their lending practices are guided more by the Party’s political aims than by commercial ones, and the institutions have required periodic bailouts to remain solvent.

Fraser Howie

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