China’s central bank on Thursday released a three-year plan to develop the nation’s burgeoning fintech sector, in a move to breathe fresh air into financial innovation in the world’s largest internet market while curbing risks.
Defining fintech as technology-driven financial innovation, the plan – posted on the website of the People’s Bank of China (PBC) – lays out a road map that runs from now until 2021.
It envisions pushing domestic fintech development toward global leadership and ensuring the nation’s fintech applications are advanced and controllable.
The release of the plan suggests that regulators, who have been studying the sector for several years, have finally constituted an action plan to lay the foundations for fintech growth, Yang Wang, executive president of the Hande Fintech Research Institute, told the Global Times on Thursday.
In March 2017, then PBC governor Zhou Xiaochuan told a press conference during the annual two sessions that fintech development would be encouraged while its resultant risks and unhealthy activity needed to fall under regulatory purview.
Since the financial sector is meant to serve the real economy, the plan will lead to a culling of the sector and a survival of the fittest, meaning that unlawful activities such as scams in some peer-to-peer lending platforms that appear to have been disguised as fintech innovations will die out, said Yang, who is also a senior research fellow at the Fintech Institute of Renmin University of China.
This process will boost blockchain and big data development, which is being held back by skepticism over their commercial viability in the real world, he noted.
The development plan outlines six priorities. Among them are efforts to strengthen the reasonable use of fintech to turn it into a “new engine” powering the financial sector’s quality development. An improvement in fintech infrastructure is also being prioritized, which calls for continued efforts to improve the ecosystem of the fintech sector and take appropriate action in the fields of laws, regulations, credit services, standards and consumer protection.
China leads the US in some aspects of the fintech ecosystem, such as the growth in investment and the payment system, a vital part of the ecosystem, according to Yang. However, the nation still trails the US in other aspects, including laws and credit services supporting fintech development.