The Guangdong province capital of Guangzhou has just announced that it will allow foreign investment in micro-loan companies within its jurisdiction as part of “regulatory sandbox” trials.
The Guangzhou Financial Regulatory Department recently issued the “Guangzhou Municipal Three Year Plan (2020 – 2022) for the Establishment of a National Micro-loan Sector Benchmark City” (广州市创建全国小贷行业标杆城市三年行动计划（2020-2022年）).
The Plan calls for allowing the establishment of wholly foreign invested micro-loan companies in Guangzhou in a bid to “enrich” local micro-loan offerings.
It specifically stipulates that Guangzhou micro-loan companies will be allowed to “actively attract Hong Kong, Macau and international shareholders,” while also “encouraging the entry of international venture capital and raising the international management level.”
The Guangzhou area will focus on the introduction of Hong Kong and Macau capital, and the establishment of wholly foreign invested micro-loan companies in key areas including Minjian Financial Street, the Nansha Free Trade Zone and Guangzhou International Finance City, as well as exploring the establishment of micro-loan companies in the Greater Bay Area that operate throughout the region and serve Greater Bay development.
The Plan also outlines the creation of a “regulatory sandbox” to foster innovation in the local micro-loan sector.
According to the Guangzhou Financial Regulatory Department micro-loan companies have emerged as a “major force” for financial inclusion since the launch of trials a decade ago. The local micro-loan sector has provided 226 billion yuan in loans to nearly 20 million people in the Guangzhou area.