Signs of support for China’s e-lenders after crackdown announced
Recent state media commentaries suggest official backing for those playing by the rules, industry insiders say
The supportive tone struck by the Communist Party’s top mouthpieces on e-finance could offer some encouragement to legitimate players, industry insiders say, after the announcement of a massive crackdown on illegal fundraising.
People’s Daily and its affiliated overseas edition published separate commentaries last week saying the crackdown was not to suppress the internet finance industry but provide a properly regulated environment for its development. The articles came one day after 14 authorities and regulators announced they would rein in illegal fundraising in the second half of the year.
Li Yaodong, research head at 01caijing, a website covering internet finance, said the commentaries were aimed at easing market fears and underscoring the government’s support for internet finance. “Stricter rules are needed to support the sector with a solid foundation for future development,” Li said.
Smaller players in online lending were worried they might be eliminated and the crackdown might also deter some start-ups from getting into the business, he said.
Tightening regulation does not mean setting an unnecessary threshold for the internet finance industry
According to People’s Daily, the government continued to support e-finance as an alternative source of credit for smaller businesses. “Tightening regulation does not mean setting an unnecessary threshold for the internet finance industry,” it said.
The sector has seen a number of suspected fraud cases, with one of the biggest centred on Ezubao, which raised over 50 billion yuan (HK$59.9 billion) from more than 900,000 investors through an alleged Ponzi scheme.