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Impacts of Digital Finance on Urban and Rural Residents in China

Background of the research

Digital finance has been critical in helping streamline the finance sector in China. Different impacts digital finance has brought to the country, both in the rural and urban areas. Digital finance has been evidenced mostly in the rural areas, considered the country’s poorest people (Daud et al., 2022). Digital finance has brought improved access to financial services. Some financial services were inaccessible to the farmers in rural China before digital finance was brought in. however, farmers today can transact with other people in China and internationally while at home. Technological advancements and deliberate government policies have achieved such a feat in about ten years. When there is access to every financial service, then there is financial inclusion. Every person in rural China can access financial services without prejudice since one deal with their phones. For example, one only needs a smartphone with an internet connection when accessing credit. Due to the availability of financial tools, farmers can get credit. Consequently, there is an improvement in farmers’ productivity since they can get the right input in their farming activities. Therefore, the rural centres in China have grown significantly due to government policies geared towards reducing poverty.

In the urban centres, there are some effects that the introduction of digital finance has had on the population. One of the main effects has been the ease of payments (Gerlach & Lutz, 2019). People can easily make payments for purchases, whether online or offline. Such convenience means that businesses have access to a wider customer base. Further, digital finance has ensured businesses can access funding, especially from outside the country. When a company needs funding, getting funding from other countries, such as America, is now easier. Having digital finance tools has ensured that such funding is availed. When businesses are developing, then the consumption behaviour of the population also changes. One of the main areas that improve is the savings culture. People are more likely to start saving and investing in digital finance instruments such as Bitcoin, considered one of the leading blockchain technologies (Yue et al., 2022). Further, people are likely to be more likely to buy luxury goods. As more people get out of poverty and have access to well-paying jobs, China has become a destination for luxury brands wanting to share the market. Therefore, more companies are interested in bringing luxury products into the country. Therefore, the consumption among the population in cities has significantly shifted over the years in different aspects.

Significance of the research topic

The topic is significant in helping one understand how the Chinese people have been impacted by technological changes, especially in the last ten years, when digital financing has become popular and widespread worldwide. China has been seen as one of the market leaders that guide other countries in adopting the right technology and utilizing it well (Aisaiti et al., 2019). When one understands how the Chinese economy has been impacted by digital finance, it will be easier to understand how digital finance will likely impact another developing country. Further, one will be able to understand the mistakes that China might have made and ensure they are avoiding the mistakes.

Another critical aspect of the research topic is that China is considered one of the developing countries though it is a strong economy. China has rural and urban populations that require digital financing tools, a problem that most developing countries face. The two sets of the population are usually unique and require one to have different approaches (Dluhopolskyi et al., 2023). Every government wants to know how to solve the problem of introducing digital finance, especially to the rural population, usually comprised of small-scale farmers. China has been solving the problems, and it has been doing well over time with its programs. Therefore, studying the different methods, China has been employing in dealing with such issues can be critical for developing countries in the global south. Further, there is a need for one to analyze the way that consumer behaviours change over time. In doing so, governments can attract the right investments in the country as they try to develop the right policies. Thus, the topic is significant in helping governments and corporations understand the modern and the future customer.


Daud, I., Nurjannahe, D., Mohyi, A., Ambarwati, T., Cahyono, Y., Haryoko, A. E., … & Jihadi, M. (2022). The effect of digital marketing, digital finance and digital payment on finance performance of Indonesian SMEs. International Journal of Data and Network Science6, 37-44.

Dluhopolskyi, O., Pakhnenko, O., Lyeonov, S., Semenog, A., Artyukhova, N., Cholewa-Wiktor, M., & Jastrzębski, W. (2023). Digital Financial Inclusion: COVID-19 Impacts and Opportunities. Sustainability15(3), 2383.

Gerlach, J. M., & Lutz, J. K. (2019). Evidence on usage behavior and future adoption intention of FinTechs and digital finance solutions. The International Journal of Business and Finance Research13(2), 83-105.

Aisaiti, G., Liu, L., Xie, J., & Yang, J. (2019). An empirical analysis of rural farmers’ financing intention of inclusive finance in China: The moderating role of digital finance and social enterprise embeddedness. Industrial Management & Data Systems.

Yue, P., Korkmaz, A. G., Yin, Z., & Zhou, H. (2022). The rise of digital finance: Financial inclusion or debt trap? Finance Research Letters47, 102604.


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