Transformative force
The BRI is enabling fintech to reshape economic development
As the Belt and Road Initiative enters its second decade, financial technology has emerged as a transformative force capable of reshaping economic development, trade facilitation and financial inclusion across partner countries. In earlier phases of the BRI, fintech contributed to five strategic pillars — policy coordination, infrastructure connectivity, unimpeded trade, financial integration and people-to-people bonds — through innovations such as blockchain-based trade finance, digital payments and cross-border digital lending. Nowhere is its potential more visible than in Southeast Asia, a region that has become a vital testbed for BRI-linked digital innovation. Yet, while fintech offers powerful tools for sustainable growth and regional integration, its implementation also reveals a series of critical challenges that must be strategically addressed.
The most immediate challenge Chinese fintech faces in Southeast Asia is regulatory fragmentation. While Singapore embraces open frameworks and innovation sandboxes, other countries such as Indonesia and Vietnam take a more protectionist approach, requiring joint ventures or local majority ownership. The result is a patchwork of conflicting standards, where companies must constantly recalibrate compliance strategies, draining both time and resources.
Rising concerns over data sovereignty have added a second layer of complexity. Countries such as Indonesia and Thailand now mandate strict domestic data storage requirements, forcing Chinese platforms to localize infrastructure and restructure backend systems. These rules, while rooted in legitimate privacy and national security concerns, are driving up operational costs and complicating cross-border interoperability.
Technological vulnerabilities also persist. Rural areas remain underserved by digital infrastructure, limiting the reach of mobile finance. Local fintech ecosystems — though vibrant — often lack the technical depth, cybersecurity safeguards and talent pipeline to scale independently. This asymmetry fuels dependency on foreign platforms and stifles organic innovation. For instance, in Myanmar and Laos, inconsistent mobile connectivity and low smartphone penetration continue to hamper the adoption of mobile wallets and digital banking services, restricting fintech's reach beyond urban centers.
Geopolitical frictions further complicate the outlook. Strategic tensions between global powers are increasingly spilling into the digital domain, with Chinese tech platforms facing increasing scrutiny. App bans, investigations into cross-border digital currency initiatives, and national security concerns have created an unpredictable regulatory climate. A prominent example is the growing competition between Chinese fintech companies and their US counterparts in Southeast Asia. While Alipay and WeChat Pay have made notable inroads, platforms such as PayPal and Stripe continue to expand aggressively, often benefiting from regulatory preferences aligned with Western institutions — particularly in markets such as the Philippines and Vietnam.
Market competition is also intensifying. Local fintech champions such as Grab Financial, GCash and Sea Group's Shopee-Pay have grown rapidly, offering user-centric, highly localized services. These platforms — often integrated with ride-hailing or e-commerce ecosystems — enjoy strong brand loyalty and vast user bases. Meanwhile, Indian, Middle Eastern and European neobanks are also vying for market share in this region, further crowding the field. Chinese companies must not only localize swiftly but also differentiate themselves in an increasingly competitive and saturated digital finance landscape.
And finally, there is the human element: trust. Financial technology is not just about systems and software — it's ultimately about people. In markets where financial literacy is uneven and cultural norms vary widely, adoption depends on more than functionality. It requires credibility, cultural sensitivity and sustained engagement. For example, in Malaysia and Indonesia, Shariah-compliant financial models are essential for user trust. Chinese companies should proactively adapt their products to align with financial principles in Islamic countries to build credibility and foster long-term acceptance in these culturally sensitive markets.
To turn these challenges into catalysts for deeper cooperation, action is needed across three fronts: government diplomacy, enterprise localization and institutional innovation.
First, strengthening digital diplomacy. At the government level, China should take the lead in promoting a more coordinated and inclusive regional framework for fintech cooperation across the Association of Southeast Asian Nations. This could involve high-level policy dialogues and regulatory alignment focused on key areas such as e-KYC (electronic know your customer), cross-border data governance, digital payment interoperability and central bank digital currencies. Existing initiatives provide valuable momentum for aligning digital development priorities and fostering institutional trust. China can also expand its role in digital capacity-building across partner countries. Strategic investment in broadband connectivity, digital literacy programs and cloud infrastructure — especially through public-private partnerships — would lower entry barriers for digital service providers and strengthen trust in China as a long-term development partner.
Second, deepening local integration. Chinese fintech companies must prioritize radical localization — not only in user interface and languages, but also in ownership structures, compliance practices and financial models. In data-sensitive countries, this could mean embracing decentralized system architectures that empower users with greater control over their personal information. Rather than simply exporting platforms, leading companies such as Ant Group, Tencent and JD Technology should invest in local R&D centers and developer ecosystems. Talent transfer, startup incubation and co-branded innovation with domestic fintech players can reposition Chinese companies from outsiders to embedded contributors to national digital ecosystems.
Equally important is the commitment to corporate social responsibility. Initiatives such as "10x1000 Tech for Inclusion", launched by Ant Group in partnership with the International Finance Corporation, have shown how fintech can serve not only market goals but broader social and environmental objectives. These efforts are essential for establishing a meaningful, lasting presence.
Third, reimagining financial institutions. China's development finance institutions can act as anchors for a new era of inclusive digital investment. Blended finance models — combining concessional loans with digital infrastructure funding — can mitigate risk for governments and private sector investors alike. Institutions such as the Export-Import Bank of China and the China Development Bank should pilot "fintech zones" within flagship BRI infrastructure projects. By integrating digital payment systems, e-CNY settlement and blockchain-based supply chain finance into ports, logistics parks and industrial corridors, these initiatives can enhance transparency and resilience across the Belt and Road investments.
Fintech represents both an opportunity and a responsibility for the future of the Belt and Road cooperation. If deployed with care, cultural awareness and a focus on long-term inclusion, it can democratize capital, close development gaps and lay the digital foundation for a more integrated global economy.
The next chapter of the BRI will not be written in asphalt and steel alone — it will be encoded in blockchain ledgers, secured by artificial intelligence algorithms, and shaped by digital partnerships that cross borders and bridge cultures. With strategic foresight and cooperation, the Digital Silk Road can evolve into a trusted model of inclusive, resilient and sustainable development — where innovation uplifts all and no region is left behind.
The author is a professor at the Center for American Studies at Fudan University. The author contributed this article to China Watch, a think tank powered by China Daily.
Contact the editor at editor@chinawatch.cn.
