Chinese Central Bank Now Includes “Consumer Finance Companies” in Official Data Releases

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The People’s Bank of China (PBOC) has commenced the inclusion of consumer finance companies as a new category in its official data releases, amidst ongoing efforts by the Chinese central government to drive domestic demand and spur growth in consumer credit.

On 10 February, PBOC announced in its “January 2023 Financial Statistics Report” (2023年1月金融统计数据报告) that starting from that month it would include three new types of non-depository financial institutions within the remit of official data releases – consumer finance companies, wealth management companies and financial asset investment companies.

PBOC data indicates that as of the end of January 2023, the collective loan balance for these three types of institutions was 841 billion yuan, for an increase of 5.7 billion yuan in the month of January. Their deposit balance was 22.2 billion yuan, an increase of 2.7 billion yuan over the same period.

Figures from the “China Consumer Finance Company Development Report (2022)” (中国消费金融公司发展报告(2022)) released by the China Banking Association in September 2022 indicate that as of the end of 2021 the number of consumer finance companies in China was 30, while the loan balance had surpassed the 700 billion yuan to reach 710.6 billion yuan, for a year-on-year (YoY) increase of 44.2%. Total assets stood at 753 billion yuan, for a YoY increase of 43.5%.

Sources from the consumer finance sector said the move by PBOC to include them in official statistics reflects the greater emphasis placed on consumer finance by China’s regulatory authorities.

“Out of these three new statistical categories, consumer finance companies primarily stimulate domestic consumption via increases in credit and direct financing, and comprise the largest share of loans made by these three non-banking financial institutions” said Ouyang Rihui (欧阳日辉), deputy dean of the China Internet Economy Research Institute of the Central University of Finance and Economics, to Securities Daily.

“Consumer finance companies, given their position as specialized consumer credit providers, have now formed part of a positive condition of competition and development with commercial banks, credit cards, Internet platforms, small loan companies and other consumer finance entities, which has effectively driven consumption and stabilised growth.

“Consumer finance companies have gradually emerged as new forces for expanding domestic demand and promoting growth in consumption – they have also already become an indispensable part of the financial system. The industry is moving towards high-quality development, and for this reason data security and data governance are particularly important. The central bank’s inclusion of this new data will promote the development of data governance capabilities for consumer finance companies.”

“The central bank’s inclusion of this financial data has also further improved the scope of financial statistics, as well as further raised the level of recognition for consumer finance companies by regulators.

“Consumer finance companies, wealth management companies and financial asset investment companies are established to better serve the real economy, expand domestic demand, and stimulate economic growth,” said Duan Yijin (段宜瑾), a regtech expert from Suoxinda Holdings.

“Although these three types of institutions are all non-depository financial institutions, they nonetheless play an increasingly important role in the financial system and in economic development, and there is a general trend for their business data to be included in financial regulatory statistics.”