Social Sciences in China (Chinese Edition)

No. 8, 2021

 

Narrowing the Digital Divide: The Development of Digital Finance with Chinese Characteristics

(Abstract)

 

Zhang Xun, Wan Guanghua and Wu Haitao

 

The new round of the global technological revolution has had a great influence on the relations of production. As a product of this process, the digital divide generally widens the gap between rich and poor in society. However, its impact on China and the country’s effort to supplement and overcome it display the distinct characteristics of the socialist system. An empirical analysis using data from the China Family Tracking Survey (CFPS) shows that due to the comprehensive victory of poverty alleviation in rural areas, the development of digital finance has brought a significant increase in the income and consumption of Chinese residents, especially for those families without internet access. Digital finance promotes structural transformation in which labor moves from agriculture to non-agricultural activities, leading to increases in wage income, agricultural operating income, and consumption. In this way, China has inhibited the expansion of the digital divide. At the same time, the development of digital finance must be accompanied by preventing and resolving systemic financial risks.