Tianhong Asset Management, the operator of internet giant Alibaba's Yu E Bao online money market fund, has hit back at criticism of the product, insisting they had "done the right thing".
"We have carried forward the market-based reform of interest rates, although it wasn't our goal," Tianhong fund manager Wang Dengfeng said in Beijing yesterday. "For the past 20 years, that reform didn't have significant progress."
By last Wednesday, the mainland's biggest online money market fund had attracted more than 81 million users, with market observers saying its assets under management had reached 400 billion yuan (HK$506 billion).
The rapid growth and vast scale of Yu E Bao have sparked controversy, with Niu Wenxin, the managing editor of state broadcaster CCTV's stock information channel, criticising Yu E Bao for raising financing costs and distorting interest rates.
"It's a big mistake to accuse Yu E Bao of helping to boost financing costs nationwide," Wang said. "What it has done is boost this cost for banks, and narrowed banks' profit margins.
"Also, interest rates are determined by supply and demand. Banks are just the medium; so is Yu E Bao. A medium can't determine the price."