Alibaba

[Wildreamz]

While cheap loans may be pro-consumer, it is on the back of the loans provided by the regional banks. The provision of loans by Ant post a systemic risk to the regional banks and the system and thus have to be curtailed. 

The CCP is usually worried about the systemic/macro risk in their policy decision. 

With most of the data residing in baba, it is logical to break up the parts and provide some check and balance in between. It may not be the most efficient system, but it allows competitors to spring up to serve different segment of the value chain.

My view is that the eco-system would be more robust post Ant when startups, private enterprise or banks come into the lending space since data is no longer the restraining factor.
  
OWH
www.weightedresearch.com

(1) The reason reginal banks trust Alibaba's credit score is probably because it has been working. ie Alibaba's credit score has been, statistically, a reliable indicator of credit worthiness. (this model is comparable/much better than current WallStreet darling Upstart Holdings)

I agree that a blackbox, private credit scoring system might pose an unknown risk to China's financial system; but I disagree that confiscation and nationalization of data entrusted to Alibaba by legislation is the solution.

(2) "The CCP is usually worried about the systemic/macro risk in their policy decision. "

Yes, but they should have regulated Ant differently. Secondly, beyond the official stated reasons, this move could also be more about reducing concentration of private wealth and power, and solidifying state control.

(3) On the surface and in the short-term, it opens up opportunity for smaller players. Bigger picture, the potential returns of innovating, being a first mover to take risks to build up valuable technology/platform/ecosystems will be diminished.

Remaining future investors/venture capital in China would need to assign a much higher risk premium, and expect much lower returns. A vicious cycle.