FinTech: Chinese Regulators Keep Up Rhetoric Against (Very Large) Fintechs
The barrage of regulatory voices against the “fintech-that-shall-not-be-named” continues.
In the latest call to hobble giant fintechs such as the Ant Group, former finance minister Lou Jiwei said regulators should restrict the number of banks that they can partner with. According to Bloomberg, which quoted the Securities Times, Lou was speaking at the China Wealth Management 50 Forum on Sunday.
Lou said that a certain fintech had created trillions of yuan worth of loans. Bad loans could spiral if one platform controlled such a disproportionate chunk of the market.
Strike a balance
Lou did not name the fintech, but presumably, it is the Ant Group.
Lou is currently director of the Foreign Affairs Committee of the National Committee of the Chinese People’s Political Consultative Conference. He also said that a balance needs to be struck between efficiency and risk. Further, regulators should prevent winners from taking all and being too big to fail.
His suggestion to Chinese regulators: let other firms have the opportunity too, on the same terms and conditions.
Alibaba’s Jack Ma has seemingly triggered a regulatory backlash from the authorities after he made certain caustic, anti-system remarks at a Shanghai conference in late October. Several very senior regulators and bureaucrats graced the occasion.
The reaction was swift. Chinese regulators pulled the rug from under Jack Ma-controlled Ant Group’s giant IPO of $35 billion by publishing a new set of regulations meant to rein in China’s micro-lending platforms. That set in motion the withdrawal of the IPO, which was to dual-listed on Hong Kong and Shanghai exchanges
Further, earlier this month, Guo Shuqing, Chairman, China Banking and Insurance Regulatory Commission (CBIRC), wrote in an article that China intended to put its financial markets under supervision.
It also would impose stricter regulatory compliance on large financial organizations, and in general, counter the risks across markets and countries, Guo wrote.
China would adopt “special and innovative” regulatory safeguards for fintech firms. However, these approaches would “balance growth and development” and at the same time prevent the creation of monopolies.
Guo kept up the pressure. A few days later, speaking at the Singapore Fintech Festival, he warned that “timely and targeted measures to prevent new systemic risks” were on the anvil.
“Facing the rapid growth of fintech, we will adopt a positive and prudent approach,” Guo said. “We will encourage innovation while enhancing risk control, so as to address new problems and challenges.”
Related Story: More Heat On Chinese Fintechs From Guo Shuqing
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