The head of the China Banking and Insurance Regulatory Commission (CBRIC) has praised the responses of the country’s online giants and fintech platforms to its ongoing anti-trust campaign.
In an interview with state-owned media published on 20 October, CBIRC head Guo Shuqing (郭树清) highlighted the unresolved prevalence of anti-competitive conduct in the Chinese financial sector.
“In certain areas and segments of Chinese finance, monopolies and inappropriate competition issues are now highly pronounced” said Guo.
Guo highlighted three key areas of concern, including:
- Disorderly expansion of industry capital in the financial sector: “China’s financial sector has attracted various forms of capital during its high-speed growth phase. With the investment of industry capital in stocks, and in particular the share control of financial institutions, if there is any non-compliant affiliate conduct, it can transform commercial risk into financial risk.”
- Illegal and non-compliant financial activities pursued under the banner of “financial innovation” and “online finance”: “There have been a number of enterprises and individuals who have used terms such as ‘online wealth management,’ ‘online lending,’ online insurance’ and ‘online crowd funding’ to attract funds from the public to invest in non-standard products and projects, culminating in the creation of bank-like platforms…not only are these platforms not subject to the capital restrictions, market restrictions and regulatory restrictions of banks, they also lack any risk control in the real sense of the word, and are highly likely to create shocks for financial activities in multiple areas.”
- Certain large-scale online platforms are involved in multiple types of financial operations and have engaged in inappropriate competition. “There are certain products and certain segments that have seen the formation of monopoly conditions and even the formation of ‘winner takes all’ conditions, that impede fair competition and lead to the obtaining of extra profits. Some platforms have breached existing financial regulations, engaged in regulatory arbitrage, mixed their financial operations with other commercial operations, and increased hidden risk in the financial system. Some platforms have also misled consumers into excessive consumption, harming the lawful rights and interests of consumers.”
Guo nonetheless praised the responses of China’s Internet and fintech companies to the anti-trust measures of authorities, which have seen giants such as Ant Group, Tencent, DiDi Chuxing and ByteDance subjected to disciplinary regulatory discussions and penalties.
“With regard to the rectification measures for 14 online platforms, financial regulatory authorities have made mention of myriad problems, the majority of which have already obtained positive responses, and around half of which have been implemented,” said Guo. “There will be marked and substantive progress in this area prior to the end of the year.
Guo also highlighted the early effectiveness of the adoption of a slew of measures to restrain the formation of monopolies and the disorderly expansion of capital in the banking, insurance and securities sectors.
These include new laws governing major shareholders in banking and insurance institutions, the undertaking of a three year corporate governance action plan, and the strengthening of risk divides between real operations and financial operations.