Book review of “The Cashless Revolution” by Martin Chorzempa

Book review of “The Cashless Revolution” by Martin Chorzempa

October 17, 2022 Off By administrator


When Martin Chorzempa, then a couple of years out of college, moved to Beijing in 2013 as a young researcher, he witnessed an antiquated and very low-tech financial system. Interest rates on savings were capped below the rate of inflation. Credit cards issued by a state monopoly were used by only a few. Most people paid cash for nearly everything. Online shopping was clunky. But soon after, China’s fintech revolution hit, moving so swiftly that by the time Chorzempa returned to the United States in 2015, it felt like going back in time. Cash in China had largely disappeared. Smartphones had replaced wallets. And the model was spreading. By the time Chorzempa went to Thailand on his honeymoon in 2017, he discovered that convenience stores wouldn’t take his Visa card; it was either Thai baht or China’s Alipay, a mobile payment app with more than 1 billion users in China and beyond.

Today, China is ahead of the United States on almost every aspect of digital finance — including the creation of central bank digital currency — and it is eager for its super-apps to expand globally. In “The Cashless Revolution: China’s Reinvention of Money and the End of America’s Domination of Finance and Technology, Chorzempa, now a senior fellow at the Peterson Institute for International Economics, explains how China’s fintech entrepreneurs grew so large so fast — and what happened when they became a threat to the Chinese state. Despite the hyperbolic subtitle, the book is an authoritative, comprehensive and thoughtful account of a remarkable episode in technology and finance that offers lessons for the United States as it seeks to encourage innovation in finance without putting consumer or financial stability at risk. It is written clearly enough for readers who are expert in neither finance nor Chinese politics. (Full disclosure: In reading the acknowledgments, I discovered that Chorzempa and I share an agent and an editor. I have not discussed this book with either.)

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The first and last chapters of this book capture the essence of the story and may be sufficient for readers less interested in the blow-by-blow (and occasionally repetitive) account of the rise and fall of Alibaba’s Jack Ma and Tencent’s Pony Ma (who share a last name common in China and are not related). In short, big state-owned banks were run not for the benefit of savers or small borrowers but for the benefit of state-owned enterprises, which enjoyed low-interest loans. The banks had essentially no competitors until Alibaba (which launched Alipay) and Tencent (which owns WeChat), encouraged by the Communist Party leadership, built, as Chorzempa explains it, “a new financial model around super-apps that started with e-commerce, social media, and games and expanded into financial empires spanning payments, investments, and loans.” It was as potent an economic force as a merger of Facebook and Vanguard would be. The…

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