"If you can't really reform the banks," said Chorzempa, "you can create more competition."
But then came concerns about shady, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, including Ant. Beijing has been closely monitoring the financial instruments that small lenders are creating from their consumer loans and selling to investors. Such securities help Ant to fund some of their loans. But they also increase the explosion if too many of these loans are not paid back.
"These types of derivatives are something the government is really concerned about," said Tian X. Hou, founder of research firm TH Data Capital. Given Ant's size, she said, "The government should be concerned."
The bigger concern for China is growing household debt. Beijing wants to foster a consumer economy, but excessive borrowing could ultimately hurt people's purchasing power. The names of two of Alipay's popular loan functions, Huabei and Jiebei, are light-hearted invitations to spend and borrow.
Huang Ling, 22, started using Huabei when she was in high school. At that point, she was not yet entitled to a credit card. With Huabei & # 39; s help, she bought a drone, scooter, laptop and more.
The line of credit made her feel rich. It also made her realize that if she really wanted to be rich, she had to be busy.
"Living beyond my means has forced me to work harder," said Ms. Huang.
First, she opened a clothing store in her hometown of Nanchang in southeast China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.
Shopping online became a way to alleviate daily anxiety, and Ms. Huang sometimes raised thousands of dollars in Huabei bills, which only made her anxious. When the pandemic brought her business to its knees, she fell behind in her payments. That brought her into a deep depression.