Alipay and WeChat Pay online payment logos will be displayed in a store in Changzhou, Jiangsu Province, China on Nov 9, 2019. Ant Group, which operates Alipay, and Tencent, which operates WeChat Pay, are the two dominant players in China’s mobile payments space. However, both companies offer other financial services. The regulators are watching the fintech industry in China more closely.
Wang Qiming | Visual China Group | Getty Images
GUANGZHOU, China – China’s leading banking regulator on Tuesday questioned the power of the country’s big financial technology companies, suggesting “timely and targeted action to prevent new systemic risks.”
The move appears to be an indication of more regulation in the emerging Chinese fintech sector.
In recent months, Chinese regulators have become increasingly concerned about the size of their tech giants and have proposed draft rules to regulate areas such as data usage and antitrust law.
As in the US, China’s technology companies have largely grown carefree and have become part of everyday life in China – especially in areas such as mobile payment and communication.
On Tuesday, Guo Shuqing, chairman of China’s Banking and Insurance Regulatory Authority (CBIRC), presented areas that authorities in the fintech industry will examine closely during a speech at the Singapore Fintech Festival.
“In light of the rapid growth of fintech, we will take a positive and prudent approach. We will encourage innovation while improving risk control to address new problems and challenges,” said Guo.
Cybersecurity is a problem area for the regulator. He spent much of his time questioning the power of the big fintech giants in China, but didn’t mention any by name.
Guo said “promoting fair market competition” is a priority, but traditional antimonopoly laws may not work for the fintech industry.
“(The) fintech industry is creating many new phenomena and problems. We may need to pay more attention to the following questions. Has big technology blocked newcomers? Did they not collect data properly? Have they refused to disclose information that is being made public should “Have you misleading users and consumers?”
Last month, another regulator, the state administration for market regulation, released draft rules that were the first to define what constitutes anti-competitive behavior. It is broadly aimed at the country’s tech giants like Alibaba, Tencent, Baidu, Meituan, and others.
When it comes to mobile payments, Alibaba subsidiary Ant Group and Tencent are the two dominant players through their respective apps Alipay and WeChat. But they also operate other financial services such as linking borrowers with lenders. Without naming these companies, Guo seemed to target both companies that do more than just make payments.
“Some large technologies operate cross-industry businesses with financial and technology activities under one roof. It is necessary to monitor this spillover closely … and take timely and targeted action to avoid new systemic risk,” he said.
Guo also said it was necessary to “clarify ownership of data,” claiming that large technology companies have “de facto control over data.” He said it was “necessary to clarify the data rights of various parties”.
Earlier this year, Chinese lawmakers passed a civil code that focuses on privacy for individual users. It should come into force next year.
Guo also said that there needs to be a focus on strengthening international coordination for the flow of data across borders.
In September, China launched a global data security initiative that set out principles to be followed in areas ranging from personal data to espionage.