Modern monetary policy

Persistent puzzles or “anomalies” are leading to questions about the validity of the economic current paradigm. More than 10 years after the financial crisis, economics is increasingly afflicted by issues such as enduring low inflation, climate change, socio-economic inequality and the difficulty of stimulating economic growth in the face of structural headwinds. As such, a new economic paradigm is emerging about debt, and the role of monetary and fiscal policy by policymakers. More so, political discussion and events will amplify this debate in the coming years.

Observations

  • The U.S. annual budget deficit will hit $1 trillion this year, grew 39% in the first eight months of this fiscal year, and will increase to $1.1 trillion for the fiscal year 2020. As a result of running persistent deficits, the Congressional Budget Office estimated in January of this year that U.S. national debt is expected to grow from the current 78% of GDP to 105% of GDP by the end of the next decade and to about of 150% of GDP in the coming three decades. This would be an all-time high and unprecedented episode debt build-up during a boom of the business cycle.
  • At the beginning of this decade, then-President Obama instated the bipartisan “National Commission on Fiscal Responsibility and Reform” (often called “Simpson-Bowles” for the co-chairs of Alan Simpson and Erskine Bowles). In November 2010, the commission released its plan to improve the U.S. fiscal situation and achieve fiscal sustainability in the long-term. However, debt has actually been growing in the U.S. this decade, even before Trump. We have written before that debt is on the rise globally, meaning that central banks and governments have fewer means to fight the next recession.
  • In 2009, economists Reinhart and Rogoff wrote an influential paper on the growth prospects given nominal debt level. There is an “exact” level of bad debt. The credit-to-GDP gap captures the build-up of excessive credit, defined as the difference between the credit-to-GDP ratio and its long-run trend and it has been found to be a useful early warning indicator of financial crises. A growth of 10 percentage points is generally considered cause for concern. Furthermore, high private debt is usually more worrying than high public debt, especially with high debt levels among middle- and lower income groups causing economic growth to stagnate, as governments have more alternatives to pay off their debt (e.g. issuing more of their own currency or increasing taxation). Lastly, the trajectory of debt development is much more important than its nominal level, and budget deficits are the causal mechanism that make debtors vulnerable to financial instability.
  • The new Democratic Congresswoman Alexandria Ocasio-Cortez issued a resolution revolving active measures to combat climate change and socio-economic inequality named the Green New Deal. To finance this huge stimulus package, she stated that governments don’t need to balance their budgets and that budget surpluses actually hurt the economy. Referring to Modern Monetary Theory (MMT), she stated that it should be “part of a larger conversation”. Bernie Sanders, a Democratic presidential nominee, is also a proponent of MMT, while opposing Democratic Presidential nominee Elisabeth Warren has stated that “we need to rethink our system in a way that is genuinely about investments that pay off over time”.
  • In January of this year, Oliver Blanchard, former Chief Economist of the IMF, stated that there were many reasons to doubt the supposed costs of running U.S. budget deficits, as interest rates are below economic growth rates, such that net interest payments are still around their historical averages. The fact that a former IMF Chief Economist made these remarks gained widespread attention in economics, as the IMF has long been an advocate of austerity and balanced budgets to deal with economic problems (the IMF was considered an important institution advocating the neoliberal or “Washington consensus”, which informed economic policymaking in the last decades).
  • Ray Dalio, the best-paid hedge fund manager of this year, has said the U.S. eventually will have to adopt a new monetary policy and economic philosophy that uses zero interest rates to finance its government spending. We have written before that despite massive quantitative easing programs, inflation in the developed world remains far below its historical average due to structural issues such as technological developments and demographic transitions. This becomes even more puzzling considering the fact that there is record-low unemployment and economies are nearing full employment (thus falsifying one of the key decision-making tools of central banks, the “Philips curve”).

Analysis

Support for Modern Monetary Theory (MMT) is on the rise, as economists are reconsidering their assessments of the risks of debt, as well as speculating about future ways to deal with persistent economic problems such as inequality, low inflation despite record-low unemployment (i.e. a broken Philips curve), and even climate change. The theory, in brief, holds that debt-to-GDP ratios are irrelevant to countries that issue their own currency, as they can always print extra money, and their only constraint on spending is inflation. As such, proponents of MMT argue that fiscal policy is the most important tool to achieve full employment (i.e. keeping up demand) and economic growth. The key idea of MMT is that the balance of spending in the public sector is mirrored by a balance in the private sector: a government surplus leads to private sector deficits and vice versa. Governments could then cause economic downturns as they lead to private sector deficits, which should be solved by deficits and government spending. Furthermore, taxation should be used to keep inflation in check, as it takes money out of the economy, thus keeping private parties from spending and pushing up prices. Additionally, inflation is not caused by excessive growth in which aggregate demand outstrips aggregate supply, but by large companies with market power that tighten supply and artificially drive up prices. As such, MMT holds that fiscal deficits are irrelevant as long as unemployment and inflation are low, and that the economy and inflation should be managed by fiscal instead of monetary policy.

With neoliberalism in retreat after the 2008 financial crisis and Eurozone crises, Modern Monetary Theory could deliver building blocks for thinking about a new economic paradigm.

But more importantly than the question whether MMT is fully correct or whether it will eventually overtake mainstream economic thinking, MMT corresponds to the current Zeitgeist. First, it can explain some of the most pressing problems that economists have had to deal with since the 2008 financial crisis, such as simultaneous low inflation and unemployment: they claim that the low current inflation is caused by too low aggregate demand, which should be solved by running larger deficits. Second, it criticizes the neoliberal idea that budgets should always be balanced and austerity is the solution to economic problems. An example might clarify this. Although many point to budget deficits as the cause of the Eurozone crisis in 2010, the episode could also be explained from a rise in risk premiums and a corresponding sudden stop in cross-border lending because of the 2008 financial crisis. This endangered the financial solvency of banks and governments dependent upon lending, as they run current-account deficits. As such, a balance-of-payments crisis turned into a public debt crisis, worsened by prolonged austerity, which held back investments to boost the productive capacity of crisis-struck economies (following neoliberal advice by the European “troika”). With neoliberalism in retreat after the 2008 financial crisis and Eurozone crises, MMT could deliver building blocks for thinking about a new economic paradigm.

More importantly, the idea that our economies need structural reform to deal with future challenges (i.e. unemployment caused by automation, higher risk premiums and costs caused by climate change) in the face of persistent problems (i.e. socio-economic inequality and environmental degradation) has made the idea of more active governments more fashionable. Indeed, the deep political transition that is needed is reflected in the active role of governments (e.g. some MMT proponents suggest that governments should provide “job guarantees”) and the use of fiscal policy to create sustainable and socially responsible investments (e.g. the Green Deal). Indeed, many Democratic presidential nominees have made MMT an integral part of their economic election agenda. Lastly, our age of returning Great Power competition asks for governments that take a more pro-active stance in designing a future-proof industrial agenda. MMT, with its focus on fiscal instead of monetary policy, could become a tool for politicizing economic policy of leaving it in the hands of “technocratic” central bankers.

Implications

  • The MMT view that inflation is often the effect of artificially tightened supply by monopolies could provide additional ammunition in the debate about breaking up Big Tech companies. However, we have written before that it is questionable whether current anti-trust regulation (with its focus on consumer welfare and prices) is suitable for dealing with these companies, which actually lower prices of many goods and services (in nominal currency terms).
  • We have written before that money always has a political side, and that this must be carefully managed or else currencies might become (literally) worthless. Although MMT holds that small budget deficits and surpluses actually hurt inflation, there is a big danger of inflation spinning out of control, beyond the reach of government taxation, as regulation can often take long to be decided upon and come into effect. Money that comes from governments printing it and increasing inflation could therefore lead to lower trust in “fiat money” and spur the move towards new sources of money that are less susceptible to politization (e.g. cryptocurrencies).

The implementation of 5G is important for the upgrade of Alibaba & Tencent’s services

5G is the next generation of ultra-fast wireless technology, offering faster data rates, reduced latency, energy savings, cost reductions, higher system capacity, and massive device connectivity. It is expected to power industrial applications such as smarty city infrastructure and the industrial internet, but can also impact consumer services. For example, 5G will enable Tencent’s gamers to seamlessly stream PC and console-quality games on their smartphones without sacrificing processing power or battery life. For Alibaba’s short-video platform Youku, a 5G connection would mean that users can send high-resolution 4K video within a few seconds.

In fear of dependency on Western hardware, Alibaba has set up a semiconductor division

Resembling the States’concern, both Ma’s have outspoken their fear of western depencency when it comes to core technologies:

Alibaba’s Ma:

If we do not master the core technologies, we will be building roofs on other people’s walls and planting vegetables in other people’s yards.

Tencent’s Ma:

[China]’s digital economy will be a high-rise built on sand and hard to sustain if we don’t continue to work hard on basic research and key knowledge, not to mention the transformation from old to new forms of drivers or high-quality development.

In reaction, Alibaba’s R&D arm DAMO (Academy for Discovery, Adventure, Momentum, and Outlook) has set up its own semiconductor manufacturing business and unveiled its chip in July 2019. The chip is designed to process AI tasks such as image, video and voice analysis and will be used for tasks such as autonomous driving, smart cities and smart logistics.

 

Listen to this podcast for more information about 5G in China:

The implementation of 5G is important for the upgrade of Alibaba & Tencent’s services

5G is the next generation of ultra-fast wireless technology, offering faster data rates, reduced latency, energy savings, cost reductions, higher system capacity, and massive device connectivity. It is expected to power industrial applications such as smart city infrastructure and the industrial internet, but it can also impact consumer services. For example, 5G will enable Tencent’s gamers to seamlessly stream PC and console-quality games on their smartphones without sacrificing processing power or battery life. For Alibaba’s short-video platform Youku, a 5G connection would mean that users can send high-resolution 4K video within a few seconds.

In fear of dependency on Western hardware, Alibaba has set up a semiconductor division

Similar to the state’s concerns, Tencent’s and Alibaba’s Ma’s have expressed their fear of western dependency when it comes to core technologies.

“If we do not master the core technologies, we will be building roofs on other people’s walls and planting vegetables in other people’s yards.”
– Jack Ma (CEO Alibaba)

“China’s digital economy will be a high-rise built on sand and hard to sustain if we don’t continue to work hard on basic research and key knowledge, not to mention the transformation from old to new forms of drivers or high-quality development.”
– Pony Ma (CEO Tencent)

In reaction, Alibaba’s R&D arm DAMO (Academy for Discovery, Adventure, Momentum, and Outlook) has set up its own semiconductor manufacturing business and unveiled its chip in July 2019. The chip is designed to process AI tasks such as image, video and voice analysis and will be used for tasks such as autonomous driving, smart cities and smart logistics.

Alibaba and Tencent and Censorship

Within their services and products, Tencent and Alibaba help the government by censoring keywords deemed politically sensitive, while in-house censors also delete posts and accounts. Tencent is quite active in censoring, as the company scored a zero out of 100 for WeChat’s lack of freedom of speech protection and lack of end-to-end encryption in a 2016 Amnesty International report on user privacy.

Alibaba and Tencent have high hopes for the cloud

For Tencent and Alibaba, the cloud started as a crucial component of their internal economy. Over the past few years they have branched out, offering their in-house products to businesses.
Today, Alibaba dominates cloud computing in China with a 43% market share. Under Jack Ma, Alibaba made cloud computing a key priority, and CEO Daniel Zhang plans to make cloud computing technologies an even bigger part of Alibaba’s corporate focus over the next couple of years (for more information see Alibaba’s company profile).
Tencent’s cloud business is the second largest in China, with an 11% market share, according to industry researcher IDC. The company entered the ‘cloud-game’ relatively late, and recently announced to spur its push in cloud computing by investing billions of dollars. This move can be seen as part of its overall strategy to shift focus from its consumer-faced business to the industrial internet. Its cloud-computing business should cater to industries such as retail, mobility, healthcare, and education.

Alibaba and Tencent are members of the National AI Team

Starting in 2017, the Chinese government recruited Alibaba, Tencent, Baidu and iFlyTek to lead key projects in the development of next-generation AI technologies. Alibaba’s cloud computing division was tasked with a smart city project to improve urban life (see Smart Habitat layer for more details), while Tencent has been designated to become a leader in AI-assisted medical diagnosis.
Government endorsement helped Tencent to launch its AI Medical Innovation System, an AI-powered diagnostic medical imaging service. The technology currently has accuracy rates of over 90% for preliminary diagnoses of esophageal cancer, 95% for lung sarcoidosis, and 97% for diabetic retinopathy. Several of Tencent’s AI departments, such as the AI Lab and Tencent Youtu Lab, collaborated to develop the image recognition, using the over 1 billion images on the company’s social network. After the success in healthcare, Tencent is looking to apply its AI knowledge to other applications, such as transportation solutions, security, and protection, as well as voice recognition.

In this episode of the ChinaEconTalk podcast, China expert Jeff Ding of the Future of Humanity Institute discusses the detour Tencent is making from the national champion designation [12:18-13:35]:

Alibaba and Tencent are working on the city of the future…

ET City Brain
The Chinese government designated Alibaba with the task of applying innovative technology to improve urban life. This resonated in Alibaba’s cloud-powered and AI-driven urban project “ET City Brain,” which aims to use AI to optimize city-services in real-time. One of Alibaba’s first pilots focused on reducing traffic congestion in Hangzhou. The video below shows how innovations within several layers of the Stack (think of Cloud Computing, Facial Recognition, and AI) are merged to improve traffic speed up to 11%.

PATH
A joint effort in the smart city area is PATH (Ping An, Alibaba, Tencent, Huawei), a smart city initiative in which these four Chinese tech giants apply their core technologies and an investment of 50M RMB in order to propel China into the global smart cities race (and of course to counter some major problems such as air pollution and congestion).

…but rural areas are also a key priority for Alibaba and Tencent

While smart digital applications are often first rolled out in #tier 1 or 2 cities, both Alibaba and Tencent are currently working on a Rural Strategy. Especially Alibaba sees tier 3, 4 and 5 cities and rural areas as an important new addressable market.
Striking examples are:

•  Tencent-backed WeDoctor and Alibaba’s Good Doctor are making healthcare more accessible for patients in tier 3 and 4 cities.
•  Alibaba invested 716 million USD in Huitongda Network, a platform that offers a variety of business models to help offline stores sell goods via e-commerce offerings, and also help online retailers sell directly to rural residents.
•  Alibaba launched Rural Taobao in 2014, allowing rural residents to buy and sell items online through the company’s Taobao online marketplace. Since its creation, Rural Taobao has expanded steadily, growing to cover 29 provinces, more than 700 counties, and over 30,000 villages.
•  Juhuasuan is Alibaba’s group-buying and flash-sale platform and will be repositioned as an online marketplace for consumers in tier-4, tier-5 cities and rural areas.

“China is experiencing an ongoing consumption upgrade as people look for different ways to enhance their lifestyle. (…) We are now seeing more and more consumers in China’s less-developed regions becoming sophisticated shoppers. They are demanding the same high-quality products as those in top-tier cities.”

– Jiang Fan, President of Tmall and Taobao

Tencent and Alibaba aim for a friction-free consumer interaction through voice

Both Alibaba and Tencent are investing in new consumer interfaces. For example, they are discovering the power of voice as an interface, and more specifically the smart speaker;

Alibaba’s voice assistant is called Tmall Genie. The device is on the market as a regular speaker since 2017 but is also available as a mirror (Tmall Genie Queen) as a device in connected cars (Tmall Genie Auto), and with a built-in monitor (Tmall Genie Family).

The Voice Assistant will become an increasingly important player in our life. I believe that in the coming decade, it will be connected with more devices and be the point of connection for different scenarios in our life, using voice commands to control our homes, vehicles and our personal devices.”

– Miffy CHEN, General Manager, Alibaba AI Labs

Two years after Alibaba, Tencent launched its smart speaker Xiaowei. The launch of Xiaowei is seen as a move of Tencent into diversifying its products and services into more business and industries (such as the B2B and IoT market). Besides, Xiaowei (in English ‘WeChat italking’) will link WeChat users with Tencent’s services available through QQ and WeChat.

Tencent and Alibaba are investing in facial recognition technology

Based on the number of facial recognition patents, Tencent is more active in the field of face recognition than Alibaba. Nevertheless, both companies have already implemented facial recognition in real-life situations.
Tencent is working closely with government in implementing facial recognition. For example, some provinces are issuing electronic identification cards for their citizens using WeChat’s facial recognition technology. The mobile IDs can be used for authentication instead of carrying physical ID cards – mandatory for citizens at all times in China – for travel booking, real name registration at internet cafés, and other security checks. Furthermore, amid tighter scrutiny by the Chinese government, Tencent uses facial recognition to detect minors in relation to concerns that excessive video gaming is damaging public health.

In 2017, Alipay unveiled its facial recognition payment service ‘Smile to Pay.’ The company says that as facial recognition technology takes the place of QR codes, “paying by smiling” will most likely experience explosive growth over the next three years. Statistics from Alibaba during 2018’s shopping festival around singles day also suggest that payments through the face and fingerprint scans now make up 60% of all transactions.

Alibaba’s Smile To Pay system in KFC:

Alibaba and Tencent are developing their own social credit systems

The best-known private system is Sesame Credit, developed by Ant Financial, an affiliate of Alibaba. Sesame Credit is a scoring system that generates individual credit scores for consumers by tapping into Alibaba Group and Ant Financial’s vast online ecosystem and other personal credit information sources. Sesame Scores, which range from 350 to 950 points, are calculated based on five factors – credit history, behavioral preference, fulfillment capability, personal attributes and social network – and are indicators of the users’ creditworthiness. Although the system’s focus is on creditworthiness, a low score can have an impact beyond loans (e.g. being banned from certain hotels) and a government blacklist has also been integrated. At the same time, a high score gives members the possibility to relax in special lounges at China’s train stations or to use bike sharing platforms HelloBike and Ofo deposit free.

Listen to this NPR podcast on the rollout of a Chinese Social Credit System and the role of Alibaba in it:

Tencent is also testing a credit scoring feature for WeChat Pay. Similar to Alibaba’s Sesame Credit, its score is calculated based on WeChat Pay’s pool of data, particularly on personal consumption behaviour. According to Tencent, the purpose is to “provide services that make people’s lives simpler and more convenient.” Users with high scores will be rewarded with perks such as waiving of deposits for rental services and hotels, and paying for services and goods after delivery.

Tencent and Alibaba contirubte to the State’s innovation goals

Although Tencent and Alibaba are originally consumer-focused companies, they are expanding their businesses to the ‘industrial internet’, which involves the broader adoption of advanced consumer and industrial applications that take advantage of next-generation technologies for business purposes.

For instance, Tencent is teaming up with Huawei Technologies, a Chinese multinational technology company that provides telecommunications equipment and sells consumer electronics, to accelerate innovation in core technologies, such as AI and cloud computing.

Meanwhile, last year Alibaba’s CEO Jack Ma called for Chinese traditional manufacturers to fully embrace what he called the “New Manufacturing” model. New Manufacturing involves a transformation of traditional manufacturing industry by integrating technology capabilities in the internet, data, AI, cloud computing and IOT. “Proposing the New Manufacturing model is not because Alibaba plans to enter the manufacturing industry, but rather to help manufacturing companies to innovate and upgrade,” Ma said during the 2018 Cloud Computing Conference in Hangzhou. “During this shift, the current manufacturer-oriented industry will transition to a new era led by customers, where small and medium-sized enterprises can benefit the most.”’

Incubators
Furthermore, both Alibaba and Tencent invest heavily in startups and support emerging companies with incubator programs. Tencent’s WeStart for example operates innovation spaces where it offers start-ups office space to rent and incentives such as tax exemption for three years and favorably-priced access to Tencent’s products and infrastructure. Furthermore, the company assists start-ups to target government-backed support programs. Meanwhile, Alibaba’s Cloud division teamed up with the U.S. workspace operator WeWork to develop an incubation program for 20 foreign startups to enter China, and assist 30 Chinese companies to expand overseas.

Alibaba and Tencent investments in electric vehicles

Alibaba, Tencent and several other Chinese companies have joined efforts to meet China’s ambitions concerning green growth of the automotive industry. They have setup car-sharing services T3, which is powered by renewable energy, called T3.

Other examples of investments in the green future of this industry are Alibaba’s leading role in the 2.2B RMB funding round in Xiaopeng Motors, a Chinese electric car maker that aims to speed up the development of electric vehicles. Alibaba elaborates on this investment: “As a clean energy vehicle start-up, the investment in Xiaopeng Motors fits with Alibaba’s strategic focus in the automotive sector. Under our open-platform approach, we will continue to work with a range of automotive manufacturing partners to benefit Chinese consumers”.

Alipay and Wechat transformed China’s Digital payment landscape

China is a country where Visa and Mastercard are (still) banned, and it has an underdeveloped banking system. As a result, Chinese society remained largely cash-based for a long time. Nevertheless, when China started to manufacture cheap mobile phones, Alibaba and Tencent successfully set-up their own mobile payment solutions known as Alipay (by Alibaba) and WeChat Pay (by Tencent).

Users of these payment solutions link their bank cards to the wallet inside the app. Once linked, they are able to use the wallet as a debit card for direct payments in stores or for online purchases. Furthermore, users can transfer money from their bank account to create a balance on the wallet.

The digital solutions provided by Alibaba and Tencent made it extremely easy for consumers to pay with their mobile phone. In 2018, over 85% of purchases made in China were on mobile payment platforms.
In physical shops, merchants offer consumers the opportunity to pay with WeChat Pay and Alipay mostly with QR codes.

Alibaba and Tencent are SOE-investors

Established in the late nineties, with founders around 50 years old, Alibaba and Tencent are classic examples of companies that stem from the previous generation. Alibaba and Tencent realize though that today’s wave of entrepreneurs is bringing products and services that appeal to Generation Z, and this is the reason they are heavily investing in innovative startups within and beyond the Chinese border. Furthermore, to arm themselves against newcomers, Alibaba and Tencent are combining their strengths to secure their position (see section 1).

Alibaba and Tencent are SOE-investors

As a testing-ground of the mixed-ownership reform, Tencent and Alibaba have both invested in China Unicom, the country’s second-largest wireless telecom operator. These investments are financial, but are also intended to improve the services of state firms. For example, Alibaba and Unicom launched a cloud knowledge venture in order to meet demand from SOEs and governmental institutions in China for innovative technology solutions. Tencent and China Unicom are amongst other things, working on a network security platform.

Tencent’s hometown is a Special Economic Zone

Tencent’s hometown Shenzen was appointed one of the first Chinese area’s to be a SEZ. Tencent – founded in 1998 – witnessed the effects of the nomination: the share of high-tech industries in its total industrial output increased from less than 10% in 1990 to nearly 40% in 1998. Companies could make use of incentives such as access to quality infrastructure, corporate income tax exemptions, exemptions from tariffs on high-tech equipment and special treatment for employees. Other companies that arose in this area were Huawei and ZTE ( global telecommunications equipment, networks and mobile devices company).

Alibaba and Tencent endorse the Communist Party

Tencent released a mobile game titled ‘Clap for Xi Jinping: An Awesome Speech’, in which players have 19 seconds to generate as many claps as possible for Xi.

In 2019, Alibaba reportedly developed the popular Communist Party propaganda app ‘Xuexi Qiangguo’ (in English: study to make China strong). Alibaba staff is said to be responsible for developing and maintaining the app that includes news, videos, livestream and community comments.

Confucian philosophy & Daoism underlie Alibaba’s corporate culture

Without the philosophy of Buddhism, you cannot do well when your business grows to a certain extent. If you do not know the philosophy of Daoism, you have no chance of winning during competitions. If you do not understand Confucian philosophy on the construction of organizational system, you have no chance to be sustainable when your company grows to a certain size.”

– Jack Ma, Founder and CEO Alibaba

Alibaba’s Founder and CEO is strongly influenced by China’s idea of the good life. He always carries a copy of the Tao Te Ching, the foundational text of Taoist philosophy, is a big fan of Tai Chi, and has held meetings with the senior executive team of the company in a temple. Under the eyes of Buddha, the focus would naturally be how to help others, to help ever more people.
Furthermore, Ma actively spreads the Taoist way of thinking among company employees. In the early days, all of them had a Kung Fu nickname (Kung Fu and Taoism are closely linked), Jack Ma’s being “Feng Qingyang”, which refers to an “unpredictable and aggressive” swordsman.
According to Brian Wong, Alibaba’s vice president of global initiatives, an understanding of the principles behind the philosophies do help in having a better grasp of why the Chinese tech market works the way it does. “China is much more about integrating as opposed to taking over or competing in the traditional sense,” Wong explains. “We want to create and integrate.”

Rare earhts are none of Tencent’s and Alibaba’s business

Rare earths are none of Tencent’s and Alibaba’s business. Apart from Alibaba’s semiconductors, both companies do not produce goods, and therefore they are not investing in, or owning, rare earths.

Tencent has dipped its toes in vertical drama

Tencent first dipped its toes into the vertical drama category in 2018, releasing short series like My Boyfriend-ish Sister and My Idiot Boyfriend. These entertainment shows are specifically designed for the mobile screen.

Example of vertical drama by Tencent
Source: V.QQ (2018)