People’s Bank of China Calls for Greater Fintech Reform

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One of the Chinese central bank’s top officials has called for greater Fintech reforms and accelerated integration of finance with technology.

During the keynote address at the 10th China-Wuhan Finance Expo held on 22 November, Fan Yifei (范一飞), vice governor of the People’s Bank of China (PBOC), said that “under new circumstance, deepening Fintech reforms and driving deepened integration of finance with technology has major significance for advancing supply-side reforms.

“PBOC has always placed strong emphasis upon driving Fintech development, and will work with relevant departments to employ multiple measures to drive Fintech reform and innovation.

“At present China’s Fintech development shows excellent promise, but the establishment of a Fintech services system remains at an incipient stage and still suffers from shortcomings, such as the ongoing pronounced difficulty of financing for small tech companies and inadequate Fintech risk-sharing and compensation mechanisms.

“Fintech cooperative platforms and other infrastructure development awaits improvements, while the intellectual property rights system needs strengthening.”

Despite PBOC’s signalling of emphatic support for the sector, 2017 has been a fraught year for Fintech in China, with regulators just recently suspending all licensing of new online micro-loan platforms.

Earlier in the year the Chinese central government also launched a ban on initial coin offerings, as well as all forms of financing involving virtual currencies, compelling the country’s top Bitcoin exchanges to suspend operations.

According Fan the key to resolving problems with China’s Fintech sector would lie in “continue to deepen Fintech reform, and use financial innovation to assist tech innovation.”

Fan outlined a total of five measures that would lie at the core China’s future Fintech reforms.

“The first is improving a diversified financial sector and multi-tier market system…[and] establishing multi-tier finance market financing channels that satisfy the needs of tech companies.

“The second is improving the Fintech risk sharing system…and establishing a multi-tier risk sharing and credit guarantee system, with the formulation of independent assessment and restraint mechanisms that satisfy the unique features of tech enterprise risk.

“The third is deepening trial reforms of investment and loan linkages. [We] need to remould the relationship between banks and enterprises…and drive qualified commercial banks to establish subsidiaries that fulfil an investment function.

“The fourth is establishing Fintech cooperative platforms, and fostering the development of intermediary organisations. Accelerate the development of tech guarantee entities, venture capital entities and tech incubators, to provide financial services to small and medium-sized tech enterprises.

“The fifth is improving the intellectual property rights system for tech innovations…pragmatically strengthening the establishment of the intellectual property rights system, and constantly raising the quality and volume of the independent intellectual property rights of Chinese tech enterprises, increasing their core competitiveness.”

 

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