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Malaysia vs China: What’s the Difference in Financial Perspectives?

BY Team Loanstreet

Updated 19 Oct 2018

Deemed as the fastest booming and second largest economy today, China will be going full force with their "Social Credit Score" to monitor consumer behaviour that includes a reduction in financial corruption and money laundering. The nation believes surveillance tools and big data analysis technology will benefit the capital market.

Then, we have this mind-blowing centralised database called China Credit Reference Centre (CCRC) that stalks its residents for credit score checks.

Meanwhile, back at home, Malaysia has instruments such as CCRIS and CTOS that enables credit reports to be analysed and justified across current and potential financial future. The public will utilise these services to apprehend their financial health before committing to a loan or a certain financial responsibility.

Looking at these two countries approach to its citizens’ financial health, it can be said that Malaysia indeed has plenty of room for growth, in contrast to China. How much room, you ask?

Well, we shall compare and find out!


What's covered in this article?


Country Financial Risks

China priorities its unique resources such as its agricultural business that has struggled due to lack of workmanship. Not only that, its rapid urbanisation has led towards a small number of farmers that resulted in slow progress in growing the crops. This in return worsens China’s globally exported agricultural food business.

According to Bloomberg, China’s excessive expenditures may cause its total debt to continuously increase within the next 5 years which adds further stress towards chances of a financial crisis for the country.

Nevertheless, the nation’s officials have followed through upon the Five-Year Plans of China since 1953 up till 2020 to build its economic development. The objective is to disregard the middle-income trap through distribution and management of resources, sharing of economic growth and economic integration between nations to bridge the welfare gaps between its people and other nationals.

Malaysia themselves stand upon a massive national debt of around RM1 trillion. As stated by its new premier, the previous government has given guarantees towards companies such as 1MDB that now sits in financial mayhem! The financial dilemma is visibly viewed across actions made by the government in cutting off 10% of all ministers’ income, while possibly halting government projects that require greater funds.

Regardless of the potential risks, Malaysia has remained upbeat in its pursuit towards Wawasan 2020 that boasts economic firepower. The Ministry of Finance is committed to enhancing fair trade to match the growth of e-commerce globally. The Digital Free Trade Zone (DFTZ) is one initiative set out by the government towards a world with no boundaries that spur high revenues for the nation. This includes receiving aid from China to strengthen its financial outlines.



Financial Technology (FinTech) Capabilities

Imagine being able to access your local bank anywhere, anyplace and anytime? That’s the power of FinTech - the technology used within the financial services industry.  

When it comes to this department China has dominated FinTech globally due to huge contributions provided by Internet Giants such as Alibaba and Tecent. This has led to establishments such as a mobile payment system named Alipay and Tenpay that assist across e-commerce platforms.

On top of that, with greater talent pool, China is able to deliver highly skilled workforces to sustain these generational features. Wealth Management (WM) has also made way for simplified investment advice service through robo-advisors, artificial intelligence and technological solutions.​

Malaysia’s FinTech capabilities, on the other hand, lie mainly in the hands of most banks. Due to their expertise, banks act as advisors while analysing mediums such as digital wallets and e-Know Your Customer (KYC ) that are changing the financial scene.

In fact, FinTech communities are discovering leads towards artificial intelligence at which banks are constantly keeping an eye upon. China also brings Alipay to the country which caters towards the convenience among Malaysians.

Hence, Malaysians are constantly trying to benchmark their counterparts by maintaining an open door policy towards MNCs that can accelerate growth.



The Digital Currency Effect

In today’s age, digital currency is increasingly gaining traction. The Chinese Government has initiated the use of electronic money that realises the levels of transparency that disallows money laundering and tax evasion. For its people, online cash flow replaces fat wallets that confirm lesser burglary issues. Lesser worries and greater flexibility ensures a pleasant way of living. 

The same can be said among Malaysians, nonetheless! Although Bitcoin and Ethereum are controversial cryptocurrencies, the idea of promoting the value of the digital currency doesn’t stop. The Government understands that digital currencies are a hit among everyone. Therefore, guidelines are introduced while the opportunity is there for the taking among top companies to explore and endorse the potential of e-cash.



So, Can Malaysia Keep Up with China’s Fast-Growing Finances?

Such achievement would surely be an entertaining tale to tell. Is China already on the verge of becoming the biggest economy in the world? There is a study that says that it will happen before 2030.

It’s okay for us as individuals to think big as a nation. But when you’re running a nation, it’s a high-risk venture. Malaysians can only do so much as a single entity. The future of digital currency and FinTech advancement clearly portrays the superiority of China compared to Malaysia. This relates as to why the Malaysian Government continues to engage with China companies that are equipped and accustomed to developing the current resources of Malaysia.

The million dollar question then would be on whether the long-standing relationship would contribute towards a sustainable future that benefits both China and Malaysia.

Let’s wait and see!

Continue reading...

About the Author

Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!


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