The People’s Bank of China (PBOC) has met with resistance from Chinese tech giants in its efforts to corral the data they amass into the state-owned credit-scoring system.
PBOC has ordered tech giants including Tencent and Meituan to share the data they amass on users with state-owned credit-scoring agencies by early December, according to sources who spoke to The Financial Times.
Under the arrangement Baihan and Pudao, both of which are state-backed and headed by former PBOC officials, will subsequently channel a feed of the data to banks on a remunerative basis for credit-scoring purposes, amidst a financial inclusion push from Chinese regulators to step up lending to small businesses and consumers.
Sources say that the tech giants have pushed back against the practice, given that the big data they collect is a lucrative source of revenues. They also object to the fact that one of tech giants, JD.com, holds a 25% stake in Pudao, which some claim will undermine its neutrality.
The development arrives following a crackdown on China’s tech giants over the past several years, which has included curbing their unlicensed online financial activities as well as the launch of a strict anti-trust campaign. The Chinese central government has also stressed the concept of data as a factor of production in the digital economy.
Last year PBOC sought to restrict the direct sale of user data by Internet platforms to banks on privacy and security grounds. A source close to the central bank said that this practice has continued, however, given that the state-backed credit-scoring agencies Baihang and Pudao charge higher fees.
Chinese banks make extensive use of data and analytics sourced from the Internet platforms to assess the creditworthiness of prospective borrowers. The need for such services has increased since the start of the pandemic, with the launch of a financial inclusion campaign by Beijing involving the use of moral suasion to drive banks to lend more to small businesses.