A leading Chinese think tank has highlighted efforts by regulators to prevent the emergence of data-driven monopolies in the areas of finance, fintech and e-commerce.
“We are currently focused on the economic monopolies of Internet platforms, and believe that closed circuits encompassing the flow of goods, the flow of data, the flow of funds and logistics can potentially comprise data monopolies,” said Zeng Gang (曾刚), chair of the National Institution for Finance and Development (NIFD) to 21st Century Business Herald.
“When data is not open to other institutions, and is sealed into these scenarios, this can form market monopolies.”
Zeng points out that under current Chinese regulation online companies are not permitted to directly provide information to their own internal financial institutions or external financial enterprises for usage, but must instead pass it through a licensed credit scoring company.
“In actuality, this really means that engaging in financial operations requires the holding of a license. A large number of online enterprises are also rectifying their efforts in the area of finance, and making adjustments to closed-circuit ecosystems.
“From this perspective, the competitive pressure for banks brought by closed-circuit ecosystems is currently reducing. Against this background, banks are slowly adjusting their arrangements and attitude towards e-commerce, and actively abandoning their own e-commerce conduct is the correct choice. It is better for them to focus on their own strengths.”
Chinese authorities have recently sought to bring greater clarity to the permitted usage of personal information, and in particular the financial information of ordinary consumers.
On 30 September 2021 the Chinese central bank released the “Credit Scoring Operation Administrative Measures” (征信业务管理办法), which requires that fintech companies comprehensively divest themselves of personal credit scoring operations. The Measures stipulate that only personal credit scoring institutions are permitted to provide credit information to financial institutions.
“Finance is a special licensed sector and requires the holding of licenses,” said Chinese central bank chief Yi Gang (易纲), at a conference on the regulation of tech companies held by the Bank for International Settlements (BIS) in October last year.
“If Internet platform companies engage in financial operations, they should abide by the principles of the same type of regulation for the same type of operations.
“The People’s Bank of China’s requirement that Internet platform companies comprehensively divest themselves of personal credit scoring operations, and that only licensed personal credit scoring institutions can provide credit information services, transforms information monopolies into information sharing.”