The head of Beijing’s financial regulator has stressed the need for opening of the Chinese fintech sector as part of broader market access measures.
Huo Xuewen (霍学文), head of Beijing’s local financial regulatory department, said that Chinese fintech must “abide by the pace of the overall external opening of the national financial sector.”
Huo made the remarks during a keynote speech delivered at the Tsinghua Wudaokou Global Financial Forum on 26 May in Beijing.
The Beijing regulator also called for “grasping the broader trends of the world’s next technological and industrial revolution, and using an international perspective and an open, tolerant mindset to expedite a new round of fintech development.”
Huo also revealed that Beijing’s current fintech agenda includes:
- Preparations for the creation of a fintech public research and development platform;
- The establishment of a council for a fintech and professional services demonstration zone;
- The recruitment of domestic and foreign experts to participate in fintech R&D and regulation;
- Making full reference to international experience in the creation of a regulatory sandbox;
- The “forging” of regtech foundations in China.
With regard to the current state of fintech in China, Huo said that specialist risk rectification efforts covering areas such as online finance had made deep progress following continual improvements to the regulatory framework.
Public understanding of fintech is gradually returning to “rationality” following the lessons learnt from the wave of speculation in cryptocurrencies as well as the crackdown on peer-to-peer (P2P) lending in China, in tandem with the initial establishment of local financial regulatory systems.
Huo said that strong security measures and heightened regulation are vital to the healthy development of Chinese fintech.
“If we do not have strong security technology as a foundation, fintech and illegal and illicit financial activity are in fact just separated by the breadth of a sheet of paper,” Huo said.
“Because fintech possesses the unique traits of openness and extendability, it significantly heightens intrinsic risk and financial intermediation risk on financial markets.
“The credit risk, regulatory risk, technical risk and market risk that we currently encounter are all likely to spillover with the assistance of fintech.
“Laggard regulatory behaviour or an increase in illegal financial activity will all increase financial risk in the fintech era.”