Chinese financial authorities and members of industry are looking to supply chain fintech as a key driver of the digital transformation of industry and a support for growth of the real economy.
Zhou Lijun (周李军), head of JDD’s Supply Chain Finance Tech Department, said digitisation is an integral part of the development of supply chain finance in China.
“Supply chain finance itself is a form of systems engineering, and it cannot be divorced from industrial digitisation,” said Zhou on 23 November, at a supply chain finance forum held by JDD in the Sichuan province capital of Chengdu.
“We must first service the digital transformation of enterprises and the integration of enterprises with the Internet based on an understanding of industry, before then adding fintech to improve supply chain finance – this is the fundamental solution.
“This is supply chain fintech, and supply chain fintech is the first stop on the path to enterprises achieving digitisation of industry. If you can effectively do supply chain fintech, then you can truly achieve upgrades to operating efficiency, and resolve the financing difficulties of micro, small and medium-sized enterprises on the upstream and downstream of industry chains.”
China’s financial regulators have stressed the importance of fintech to the development of supply chain finance since the start of the Covid pandemic.
In September 2020, the People’s Bank of China (PBOC) led the issuance of the “Opinions on Standardising the Development of Supply Chain Finance and Supporting Stable Circulation and Optimised Upgrade of Supply Chains and Industry Chains” (于规范发展供应链金融 支持供应链产业链稳定循环和优化升级的意见).
The Opinions called for “applying fintech methods, integrating information from flows of goods, flows of funds and flows of information, and establishing a financial supply system and risk assessment system for supply chains in which core enterprises occupy a directing role and upstream and downstream enterprises are integrated.”
The Opinions also called for “providing systemic financial solution plans, rapidly responding to the settlement financing and fund management needs of enterprises on industry chains; reducing enterprise costs and raising the value of all parties to supply chains.”
Since the start of 2022, the steady development of supply chain finance has become a key focus for supply-side financial reforms in China, as well as efforts to strengthen the ability of the finance sector to service the real economy.