Page 394 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
standings, with an initial list of such P2P borrowers of-year loan balance was 1.1954 trillion yuan, while a total
already entered into the credit system. PBOC will push of 2.5779 trillion yuan in loans were made throughout
for micro-lenders and online lending institutions to use 2017 involving 118.51 million lenders and borrowers
this as a foundation for mutual sharing of information (CBN, China’s Internet Finance).
and linked risk warnings, to rapidly identify and effectively
resolve potential financial risk. The Chinese central bank Compared to developed countries, China’s internet
said that it would also exercise prudence in issuance of finance is developing well. There are several reasons for
personal credit assessment licenses, and push for China’s this. First, the relative backwardness of China’s commercial
first personal credit assessment company, Baihang Credit and financial industries in the past created a huge space
to work closely with it in order to“supplement advantages, for the emergence of internet finance. Second, Chinese
and achieve credit information coverage of online finance consumers’ awareness of privacy protection is not as
and e-commerce.” Baihang Credit has already executed high as their counterparts in western countries. Third,
credit information sharing cooperative agreements with the Chinese government has adopted a tolerant stance
241 P2P lenders, micro-loan companies and consumer towards innovation, entrepreneurship, the application
finance firms, with the provision of personal credit of new technologies, as well as new business patterns
information services to the market that were expected to and models, facilitating the growth of internet finance.
commence prior to 2019 (CBN, Chinese Central). In addition, China’s vast consumer market has provided
excellent opportunities for growth. The development of
According to the National Internet Finance Association internet finance has pros and cons, which, while creating
of China’s (NIFA) China Internet Finance Annual Report benefits, has also brought negative impacts such as
2018, released at the end of the year, the Chinese phishing and other fraudulent activities., all of which
government’s “specialist rectification” campaign against have made regulation on internet finance highly relevant.
risk in the online finance sector has achieved “orderly A mixed supervision system which can penetrate into
progress and marked results,” effectively reining in risk different industries related to internet finance needs to
increases while also achieving an “orderly disposal” of be further developed. Moderate and effective regulation
existing risk-fraught operations. The report said the by the government will help businesses develop better. As
trend of high-frequency occurrence of risk incidents the regulator and the regulated share common interests,
had been contained, following the gradual formation their partnership and collaboration will contribute to
of standardized industry growth and continuous forming a self-disciplined regulation mechanism, which is in
improvements to industry regulatory mechanisms. The the interest of the long-term sound development of China’s
report nonetheless highlighted the continued presence internet, e-commerce, and electronic finance (CDI). China is
of“pronounced compliance risk”amongst certain internet focusing greater effort in tackling the build-up of risks in its
finance companies, including those that“expand business banking and financial system, while also seeking to ensure
scope without authorization or engage in operations in credit is more effectively distributed in the real economy.
breach of regulations without licenses or qualifications,” Thus far, it has embraced fintech but policymakers are
and those whose funds flow into real estate and other making sure this is done in a controlled manner.
excess capacity sectors in breach of regulations. “All
parties to the sector should focus upon various forms Internet+Agriculture
of risk faced by online finance, including credit risk
during periods of economic transition; compliance risk A 2018 State Council executive meeting chaired by
during rectification campaigns, operational risk amidst Premier Li Keqiang China decided to improve internet
intensifying competition, and social risk during periods services and information technology (IT) infrastructure
of industry clearance,” said NIFA secretary Lu Shuchun. Lu under the “Internet Plus Agriculture” model. The move
called for China’s online finance sector to“further improve will promote integrated development of the primary,
and strengthen legal standardization, self-regulatory secondary and tertiary industries in rural areas and
mechanisms, industry infrastructure and protection of bring farmers more business opportunities that help
financial consumers.” The report also highlighted a fall increase their income. The market will play a greater role
in P2P lending platforms in 2018 as a result of China’s in the implementation of the rural revitalization strategy.
crackdown on internet finance risk, with 2625 platforms Internet technologies will be extensively applied to make
in operation throughout China as of the end of 2017 for agricultural production better targeted and effective and
a decline of 269 compared to the previous year. The end- enable farmers to adapt to shifting market dynamics.
394
standings, with an initial list of such P2P borrowers of-year loan balance was 1.1954 trillion yuan, while a total
already entered into the credit system. PBOC will push of 2.5779 trillion yuan in loans were made throughout
for micro-lenders and online lending institutions to use 2017 involving 118.51 million lenders and borrowers
this as a foundation for mutual sharing of information (CBN, China’s Internet Finance).
and linked risk warnings, to rapidly identify and effectively
resolve potential financial risk. The Chinese central bank Compared to developed countries, China’s internet
said that it would also exercise prudence in issuance of finance is developing well. There are several reasons for
personal credit assessment licenses, and push for China’s this. First, the relative backwardness of China’s commercial
first personal credit assessment company, Baihang Credit and financial industries in the past created a huge space
to work closely with it in order to“supplement advantages, for the emergence of internet finance. Second, Chinese
and achieve credit information coverage of online finance consumers’ awareness of privacy protection is not as
and e-commerce.” Baihang Credit has already executed high as their counterparts in western countries. Third,
credit information sharing cooperative agreements with the Chinese government has adopted a tolerant stance
241 P2P lenders, micro-loan companies and consumer towards innovation, entrepreneurship, the application
finance firms, with the provision of personal credit of new technologies, as well as new business patterns
information services to the market that were expected to and models, facilitating the growth of internet finance.
commence prior to 2019 (CBN, Chinese Central). In addition, China’s vast consumer market has provided
excellent opportunities for growth. The development of
According to the National Internet Finance Association internet finance has pros and cons, which, while creating
of China’s (NIFA) China Internet Finance Annual Report benefits, has also brought negative impacts such as
2018, released at the end of the year, the Chinese phishing and other fraudulent activities., all of which
government’s “specialist rectification” campaign against have made regulation on internet finance highly relevant.
risk in the online finance sector has achieved “orderly A mixed supervision system which can penetrate into
progress and marked results,” effectively reining in risk different industries related to internet finance needs to
increases while also achieving an “orderly disposal” of be further developed. Moderate and effective regulation
existing risk-fraught operations. The report said the by the government will help businesses develop better. As
trend of high-frequency occurrence of risk incidents the regulator and the regulated share common interests,
had been contained, following the gradual formation their partnership and collaboration will contribute to
of standardized industry growth and continuous forming a self-disciplined regulation mechanism, which is in
improvements to industry regulatory mechanisms. The the interest of the long-term sound development of China’s
report nonetheless highlighted the continued presence internet, e-commerce, and electronic finance (CDI). China is
of“pronounced compliance risk”amongst certain internet focusing greater effort in tackling the build-up of risks in its
finance companies, including those that“expand business banking and financial system, while also seeking to ensure
scope without authorization or engage in operations in credit is more effectively distributed in the real economy.
breach of regulations without licenses or qualifications,” Thus far, it has embraced fintech but policymakers are
and those whose funds flow into real estate and other making sure this is done in a controlled manner.
excess capacity sectors in breach of regulations. “All
parties to the sector should focus upon various forms Internet+Agriculture
of risk faced by online finance, including credit risk
during periods of economic transition; compliance risk A 2018 State Council executive meeting chaired by
during rectification campaigns, operational risk amidst Premier Li Keqiang China decided to improve internet
intensifying competition, and social risk during periods services and information technology (IT) infrastructure
of industry clearance,” said NIFA secretary Lu Shuchun. Lu under the “Internet Plus Agriculture” model. The move
called for China’s online finance sector to“further improve will promote integrated development of the primary,
and strengthen legal standardization, self-regulatory secondary and tertiary industries in rural areas and
mechanisms, industry infrastructure and protection of bring farmers more business opportunities that help
financial consumers.” The report also highlighted a fall increase their income. The market will play a greater role
in P2P lending platforms in 2018 as a result of China’s in the implementation of the rural revitalization strategy.
crackdown on internet finance risk, with 2625 platforms Internet technologies will be extensively applied to make
in operation throughout China as of the end of 2017 for agricultural production better targeted and effective and
a decline of 269 compared to the previous year. The end- enable farmers to adapt to shifting market dynamics.
394
