China’s Banking Regulator Says Internet Fees Are Driving up Financing Costs

What’s new: China’s top banking regulator warned against higher financing costs caused by high fees for referral traffic charged to banks by big internet platforms.

Some big internet platforms charge banks a referral traffic fee or information service fee as high as 6-7%, while banks’ actual loan interest rate is only 4-5%, Guo Wuping, director of the Consumer Protection Bureau of the China Banking and Insurance Regulatory Commission (CBIRC), said at a regular policy briefing of the State Council Thursday.

Guo said that reducing fees for businesses didn't just involve banks but also other market players including big internet platforms profiting from referral traffic. He said the regulator will step up regulatory efforts to curb big internet platforms’ fees.

The CBIRC, together with the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Finance, the People's Bank of China, and the State Administration of Market Regulation, jointly formulated policies to further standardize credit financing charges to reduce the financing costs of enterprises, Guo said.

The background: The move came as Chinese regulators are tightening up scrutiny over fintech firms, including giant Ant Group Co. Ltd., whose highly anticipated and potentially record-breaking IPO was scrapped late last year.

China’s market regulator has also launched a probe into e-commerce giant Alibaba Group Holding Ltd. as part of a growing antitrust drive targeting the country’s internet sector.

Online platform companies including Tencent, e-commerce firm JD.com, and food-delivery platform Meituan were summoned by the central bank in late April and instructed to fully accept financial regulators' supervision.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Denise Jia (huijuanjia@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

Get our weekly free Must-Read newsletter.