A China’s popular website, SCMP, has summarized a speech by Liang Tao, vice-chairman of the China Banking and Insurance Regulatory Commission (CBIRC), during a financial forum in the Chinese capital, thus: “Fintech firms must behave like banks, China regulator says as it ring-fences runaway industry to rein in potential risks”. This has triggered a new avalanche in the Chinese fintech community.
Indeed, over the last few days since Ant Group’s history-making IPO was aborted, Chinese leading tech companies like Alibaba and Tencent have seen their values affected as looming regulatory high voltage searchlights seem possible. This speech by Liang takes everything to another level. WSJ had reported that Chinese regulators released a new draft bill going after platform companies: “China’s State Administration for Market Regulation said Tuesday it would seek feedback on rules covering a host of potential anti-monopolistic practices on the country’s digital platforms, including offering different prices to different consumers for the same product.”
Fintech companies, which use technology to enhance financial services, should be regulated like banks and must observe the same risk and compliance requirement as financial institutions on main street, said Liang Tao, vice-chairman of the China Banking and Insurance Regulatory Commission (CBIRC), during a financial forum in the Chinese capital.
“Fintech has improved the efficiency of financial services, but it has not fundamentally changed the core nature of finance,” said Liang, adding “[we have to] include financial activities under the same comprehensive regulatory [ambit].”
Of course, so far, nothing has happened in the real business of the Chinese big techs. Tencent reported huge numbers this week but next quarter may not be as rosy if the government goes ahead with its plans to rein on these monstrous behemoths of digital empires.
From the Q3 earnings report (YOY)
- Total revenues +29%
- Operating profit +34%
- Mobile games revenue +61%
- Online advertising revenue +16%
- FinTech revenue +24%