The former head of China’s Ministry of Finance (MOF) has warned of the perils of Chinese fintech platforms becoming excessively large and influential in the wake of Ant Group’s failed initial public offering (IPO).
Lou Jiwei (楼继伟), formerly the Chinese finance minister and currently the director of the 13th CPPCC Foreign Affairs Committee, said that China needed to prevent digital finance platforms from becoming “too big to fail.”
“If a single digital finance platform occupies an excessively large market share, and the veracity of the platform’s data or the platform’s risk assessment models undergo deviations, this can lead to a large-volume of bad loans,” said Lou at the China Wealth Management 50 Forum on 20 December in Shenzhen.
Lou advocated restrictions on the number of banks permitted to cooperate with a single fintech platform as one means of resolving the dilemma of such companies becoming “too big to fail.”
The former MOF head’s remarks arrive just following the cancellation of fintech giant Ant Group’s long-awaited listing on the Shanghai and Hong Kong bourses. The listing originally scheduled for 5 November was expected to raise a record-breaking USD$34.4 billion IPO.