Guo Shuqing (郭树清) chair of the China Banking and Insurance Regulatory Commission (CBIRC) and party chief of the Chinese central bank, has touted the effectiveness of measures to contain online financial risk, while also warning of risk in relation to widespread fintech adoption.
In an essay written for Qiushi Guo highlighted a “large-scale decline in Internet finance risk” following crackdowns on illegal operations as well as China’s once-flourishing P2P lending sector.
“For a period of time China was host to a large number of unlicensed platforms that illegally engaged in financial activity, including many who made confusing use of terms such as ‘financial innovation’ and ‘Internet +'” wrote Guo.
“Risk in the Internet finance sphere has markedly improved following concentrated rectification, and a large number of illegally operating companies that engaged in online wealth management, insurance, securities, investment fund and token operations have been banned.
“The number of P2P online lending platforms that are actually operating in China fell to 29 at the end of June 2020 as compared to around 5000 at the peak, and the scale and number of people participating in such loans declined for 24 consecutive months.
Guo warned of the risk that the rapid growth of China’s fintech sector could bring to overall financial stability.
“Over the past several years rapid fintech growth has brought many opportunities for us, as well as large-scale challenges,” wrote Guo.
“Chinese fintech is at the global forefront in certain spheres, and there is no accumulated experience to which we can make reference when it comes to risk prevention and control.
“Because of the widespread adoption of new technologies such as big data, cloud computing and artificial intelligence, the forms and channels of transmission for traditional financial risk have undergone profound change.
“These risks are highly abrupt, covert and ruinous in nature, and must attract a high level of caution and alert.”