Oct 20, 2021 08:50 PM

Top Financial Regulator Says China’s Internet Giants Will Fix More Problems by Year End

Guo Shuqing. Photo: VCG
Guo Shuqing. Photo: VCG

China’s internet platforms need to do more to comply with regulators’ demands for changes ordered amid a wide-ranging campaign that started last year to tighten oversight of their financial businesses, the head of the country’s banking watchdog said.

“Financial regulators have raised more than a thousand questions during the regulatory moves targeting 14 internet platforms, and most of the questions have received responses (from those firms),” Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC), said. “About a half of the responses have led to actions and more substantial progress will be made by the end of this year.”

Guo’s comments, made in an interview (link in Chinese) with the official Xinhua News Agency published Tuesday, indicate that the internet and technology companies will announce more measures to restructure their financial services to address concerns that their activities could pose risks to the financial system and have also led to unfair competition.

Ant Group Co. Ltd., whose $34.5 billion international IPO was suspended in November 2020 after regulators raised red flags over its business model, is leading the way. In April, after months of talks with regulators, the company said it had finalized a rectification plan, which some analysts have said could become a template for other fintech giants to follow. 

Guo didn’t name the 14 companies targeted by regulators, but they cover major players in China’s digital economy. In addition to Ant Group, they include Tencent Holdings Ltd., ByteDance Ltd., and the financial units of Baidu Inc., Inc., Meituan Dianping, Didi Chuxing, and Xiaomi Corp.

In April, regulators summoned them for meetings and gave them a series of directives to comply with, including obtaining licenses to conduct financial services, separating payments platforms from their other financial services, applying for licenses to conduct personal credit reporting business, and setting up financial holding companies to incorporate finance-related businesses if they meet the criteria for doing so. Regulators also vowed to improve supervision over their issuance of asset-backed securities and overseas IPO filings.

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In his interview, Guo said China’s financial sector is highly competitive and has some problems. These include the disorderly expansion of capital, illegal financial activities disguised as innovation, unfair competition in some financial services that violates laws and regulations, and activities that infringe on consumers’ rights and interest.

“Some large internet platforms have become involved in various financial businesses and engaged in unfair competition,” Guo said. Some have built monopolies in certain products and segments and some others’ activities have increased risks for the financial system through illegal regulatory arbitrage, he added.

Guo said regulators have stepped up supervision of major shareholders of banks and insurers and launched a three-year action plan to improve corporate governance, shown “zero tolerance” for illegal financial activities, and stopped regulatory arbitrage.

“To promote fintech innovation, China granted much freedom and opened many doors for these internet companies previously. However, now we are at a point where proper regulation is needed,” Qi Wang, CEO of MegaTrust Investment (HK), a fund management company specializing in A-share equity funds, told Caixin. “Doing so (setting up financial holding companies) will help both the regulators and consumers identify the entity within an internet giant that’s responsible for the related financial risk.”

As well as tightening regulation, the authorities want to create a better financing environment for the development of the private economy by pushing banks to provide more convenient and grassroots financial services to private companies and widening their funding access, Guo said.

Contact reporter Guo Yingzhe ( and editor Nerys Avery (

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