China Accelerates National Fintech Development Plan
March 13, 2019 | BY
Marilyn RomeroThe People's Bank of China will roll out an ambitious plan for fintech following enthusiasm during the Two Sessions.
China will introduce a national development plan that will develop the use of financial technology, or fintech, more widely to serve the country's real economy, said Fan Yifei, deputy governor of the People's Bank of China (PBOC) at a news conference on March 10.
At the end of last year, the central bank teamed up with the National Development and Reform Commission to run a trial fintech program in 10 Chinese cities including Beijing, Shanghai and Shenzhen, and the government now plans to accelerate this into a national fintech plan.
The program will have a number of clear cut goals, according to Fan. These include promoting the application of financial technology to address the difficulties faced by small-and-micro-sized enterprises in getting access to finance, and the use of information networks and mobile internet technology to upgrade credit models and reduce the costs of borrowing. This can be assisted by automating approval processes for loan applications, establish a product sales network, and detecting financial risks more intelligently.
Furthermore, the development plan will push using artificial intelligence to incorporate financial functions into most public services, so that the public can enjoy real benefits from the ongoing financial reform. Data should be integrated and better exploited to serve the real economy, and services developed that help allocate financial resources to key or less-developed areas in China, said the PBOC's Fan.
Better systems for managing risks will also be a key objective. Supervision technology should be used to help financial stakeholders detect, prevent and cope with risks. Such a financial risk technology management system should be established based on machine learning and data mining, said Fan.
The ambitious plan laid out by the PBOC follows discussions at the annual Two Sessions meetings, where the development of fintech was strongly emphasized by numerous delegates. Wang Jingwu, National People's Congress (NPC) representative, and head of the central bank's financial stability department called for the use of a regulatory sandbox mechanism for the sector in which a ring-fenced trial environment could be set up to fast track development and cut compliance costs.
The need for implementing new legislation to regulate increased data sharing, and prevent its illicit collection by fintech companies, was also advocated by agribusiness entrepreneur Liu Yonghao, a representative of the Chinese People's Political Consultative Conference (CPPCC).
Another CPPCC representative, Zhang Jin, chair of investment company Cedar Holdings, called for the development of a shared service platform for supply chain financing that is connected to stakeholders such as financial institutions, core enterprises, small-and-medium-sized enterprises and third party logistics providers. Such a platform could support online information sharing, online product services, online transaction of non-standard assets, as well as facilitate policy dissemination and off-site regulation.
Neil Shen, co-founder and head of Sequoia Capital China and a special adviser on innovation and technology to the Hong Kong government, submitted a proposal recommending establishing a secure transmission system for financial data within the Greater Bay Area of Guangdong, Hong Kong and Macau, and the acceleration of trials for facilitating the flow of funds, human capital and resources.
Pony Ma, NPC delegate, and chair and CEO of Tencent, submitted seven written proposals at the Two Sessions this year, touching upon multiple areas including the Industrial Internet, the Greater Bay Area, basic scientific research and environmental protection.
China already leads the world in e-payment services, and investment into new fintech projects is coming in fast. According to data compiled by financial news site 01Caijing, Beijing attracted 267 fintech-related investment or financing deals in 2018, worth a total of Rmb161 billion, or $24 billion. Shanghai saw 85 deals worth Rmb18.3 billion, and Shenzhen 68 deals worth Rmb9.1 billion. For the country's financial regulators, the pressure is on.
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