Editorial | China strives to get balance right with move on tech giants
- Beijing has made it clear that action against Alibaba and Ant Group seeks healthier development of the industry, while economic stability remains a top priority
Technology has revolutionised consumer finance, particularly in China. But in the process, fintech, as it is widely known, has so disrupted traditional banking and outrun the regulatory environment that the authorities in major world economies have stepped in to safeguard systemic stability and protect consumers. China is no exception.
Antitrust action to curb the dominance of tech giants rocked markets early last month when the authorities pulled the plug on Ant Group’s highly anticipated US$35 billion initial public offering.
The last-minute intervention signalled an overhaul of the regulatory regime amid a rapidly evolving domestic tech landscape. It has resulted in measures to ring-fence the industry against uncontrolled growth that could lead to financial risks. They include draft rules requiring fintech platforms to make higher provisions for loans and cap loan size.
Regulators have directed Ant, an affiliate of Alibaba Group Holding, the owner of this newspaper, to return to its roots with its online payments operation, while addressing a range of concerns, from competition and monopoly issues, to privacy protection in credit rating, to irregularities and compliance with rules across a range of associated businesses.
No country has yet figured out a standard regulatory regime for fintech companies. The key issue is how to strike a good balance between an antitrust regime and the healthy development of the so-called platform economy.