Chinese head for online banking services as Weibo users shrink
The number of online financial services users on the mainland jumped 56.4 per cent to 292 million in the first half of the year, but a warning of potential risks to growth was signalled by a further heavy slump in microblogging in the wake of a government crackdown.
Internet-based banking and payments services have boomed in the last year, with Alibaba's Yu E Bao savings product drawing attention from financial regulators after the online fund snagged HK$642 billion in deposits from about 80 million investors in the first three months of 2014, making it the fourth largest money market fund in the world.
Alibaba, which owns e-commerce sites Taobao and Tmall, runs the domestic market-leading online and mobile payment platform Alipay. Rival e-commerce firm Tencent offers payment services through its hugely popular mobile messaging app WeChat - which has been a major driver of overall internet use on the mainland.
The total number of internet users in China rose 2.3 per cent to 632 million by the end of June, from 618 million at the end of 2013, according to the China Internet Network Information Centre, the official agency which compiles the data.
The ranks of mobile users rose 5.4 per cent to 527 million in the first half, surpassing for the first time the number of users who primarily access the internet via a personal computer. The number of mobile payment services users jumped 63.4 per cent to 205 million.
In March, the People's Bank of China blocked plans by Alibaba and Tencent to offer virtual credit cards, while last month the amount of money consumers can transfer to third-party online payment platforms such as Alipay was strictly limited.
"The challenge for regulators is that the financial products and services we are seeing are something that is almost completely new, not just in China, but globally, so there is very little precedent on how to regulate them," Zennon Kapron of financial consulting firm Kapronasia told the South China Morning Post.
"We will see regulation slow the growth and uptake of these products in order to maintain market stability."
PBOC governor Zhou Xiaochuan recently told Xinhua that the issue of online banking and payment merited "further study", though he added that the central bank encouraged financial innovation.
Analysts say the continued decline in usage of microblogging services is a concern. The number of users of microblogs such as Sina Weibo fell by 1.9 per cent to 275 million, after a 9 per cent drop at the end of last year.
In September last year, the Supreme People's Court said users of microblogs could be held criminally liable for false online posts that were viewed more than 5,000 times or shared more than 500 times. WeChat, which initially saw an increase in users that researcher Wang Chengjun among others linked to the Weibo crackdown, has also been targeted in recent months.