People walk past the headquarters of the People’s Bank of China (PBOC), the central bank, in Beijing, China, on September 28, 2018.
Jason Lee | Reuters
BEIJING – The central Chinese government makes it clear that fintech companies such as Ant Group are subject to the same strict financial regulations as banks.
Many start-ups in China and other countries are using new technology to sell cheaper and faster financial services, from money transfers to loans. Rapid consumer adoption has prompted banks to partner with the start-ups, which often insist they are technology or fintech companies rather than financial institutions.
“But fintech is still essentially finance, so the ‘same company, same rules’ principle should apply,” Pan Gongsheng, deputy governor of the People’s Bank of China, wrote in an op-ed in the Financial Times Wednesday. Pan also heads the national foreign exchange regulator, the State Administration of Foreign Exchange.
“We need regulation that emphasizes content and not corporate shape,” added Pan. “The goal is to align business rules and standards with regulations to avoid arbitration.”
The Chinese authorities have tightened regulations for fintech companies in recent months.
Most notably, regulators abruptly suspended the listing of Alibaba-affiliated Ant in November, just days before the company would hold what would have been the world’s largest IPO.
Pan did not mention Ant by name in the op-ed, but noted that “non-bank mobile payments business, led by Alipay and WeChat Pay” showed 75% annual growth in non-bank mobile payments between 2015 and 2019. Ant Group owns Alipay and WeChat Pay is run by Tencent.
He added that fintech companies pose the same risks as others in the financial industry, and may also collect “excessive” amounts of data and invade user privacy.
On Tuesday, China’s central bank governor Yi Gang said Ant could resume the IPO process if it could resolve legal issues.
Read the full opinion piece in the Financial Times here.