The People’s Bank of China said that it wanted to enhance international cooperation to rein in on the fintech industry, citing concerns such as the risk of excessive data collection and infringement of user privacy.
«[F]intech has not changed the nature of finance as a risky industry,» said Pan Gongsheng, deputy governor of China’s central bank and head of the State Administration of Foreign Exchange, an entity responsible for FX-related activities and the national FX reserve.
Pang noted that while technological advancements have helped the financial system improve efficiency, lower transaction costs and boost inclusion, he underlined concerns about «market monopolies and unfair competition».
The comments were published amid ongoing pressure for dominant internet giants to restructure their businesses and avoid antitrust violations. Since Ant Group's $35 billion pullouts in November last year, authorities have demonstrated increasing optimism and central banking governor Yi Gang even said during the World Economic Forum Davos Agenda 2021 that another listing attempt could potentially be successful.
Subsidization
According to Pang, one specific worry, in particular, is the practice by big tech firms worldwide to use profits from one business to subsidize another «to unfairly grab fintech market share» citing impact to small competitors who could be pushed out or forced to merge.
Excessive data collection and infringement of customer privacy was also cited in the article.
«Strike a Balance»
Pang said that China was seeking to «strike a balance between encouraging fintech development and preventing financial risks via prudent regulation». He also said that it sought to create a level playing field for all by opening the sector, highlighting a list of foreign participants that include 116 banks, 65 insurers and 15 brokerage firms.
«But fintech is still finance in essence, so the principle of 'same business, same rules' should apply. We need regulation that emphasizes the substance not the form of a company. The aim is to align business rules and standards with regulation to fend off arbitrage,» he added.
«Looking ahead, China’s financial authorities want to step up exchanges with our international counterparts and strengthen co-operation on antitrust issues, data treatment and consumer protection.»
