China’s central bank encourages ‘controllable risks’ in fintech innovation in Alibaba’s home province of Zhejiang
- A new government notice aims to improve financial services in an industry hit hard by China’s Big Tech crackdown over the past 16 months
- The central government has recently signalled renewed efforts to improve economic growth, but its language on fintech innovation remains cautious
Chinese financial regulators, including the central bank, and the Zhejiang provincial government are encouraging “controllable risks” in the country’s e-commerce hub to spur financial technology innovation, according to a government notice.
The remarks expressing a greater appetite for risk are seemingly a departure from the more hardline stance regulators have taken against Big Tech firms since November 2020, when Ant’s highly anticipated US$35 billion initial public offering was scuttled days before the listing.
“Chinese fintech groups have, in some cases, grown so big that their collaborations with banks are increasing contagion risks in China’s financial system,” Grace Wu, an analyst at Fitch Ratings, previously told the Post after Ant Group’s cancelled IPO, adding that she expected to see tighter regulations in the future.
The document’s guiding principles clearly state that “financial opening-up and innovation need to be driven steadily under the premise of effective regulation and controllable risks”.
It is only under these principles that banks are encouraged to “fully utilise the synergy with their subsidiaries to provide continuous financial support for science and technology enterprises”, the notice said. Additionally, the draft supports innovation in intellectual property insurance and better coverage of technology-related insurance.
The government is also looking to support the industry with two new bureaus for tech innovation and social responsibility, the State-owned Assets Supervision and Administration Commission of the State Council announced on Wednesday. The new government bodies will help “centralise mindsets … when driving innovation”, the announcement said.
The measures implemented in Zhejiang’s pilot project are expected to be rolled out across the country once proven effective, according to government officials.
“Examples are expected to be set up for other regions to roll out step by step so that common prosperity for all people can be achieved gradually,” an official of National Development and Reform Commission said last year in a press briefing.