Conflict, contention and cooperation in China's new model of financial intermediation monitoring

The modern Chinese financial system has developed by innovating new, globally competitive financial technologies alongside traditional forms of financial intermediation. In Western banking theory, financial institutions have a fiduciary responsibility to privately protect borrowers' and capital providers' information as well as social obligations to signal intentions of their lending and investment targets; both knowledge of proprietary information and its signaling increase the power of financial institutions. Reluctant to empower financial institutions politically and concerned about shadow banking, China's national government is coopting data from large on-line technology firms to engage in financial and social monitoring through the new Social Credit System. China may gain some macro-economic and social benefits. China's different approach might provide more stability than western models but may also compromise privacy of borrowers and capital providers. Contention in China's domestic financial system and within the international financial system may influence development of this algorithmic financial governance model.