China tightened control of online financing, saying it is looking to develop healthy industry growth amid criticism the platforms contributed to an equities plunge that wiped US$3 trillion off the market.
All client funds must be parked at established banks and Internet finance firms would need approval from financial as well as cyberspace regulators, the People’s Bank of China said in a statement on its Web site on Saturday.
They must also provide sufficient disclosure and send risk reminders to customers.
China’s online lenders helped fuel an equity roller coaster that saw the benchmark index rallying more than 150 percent in the 12 months through June 12 before abruptly crashing.
The sites offered 3.1 billion yuan (US$499.2 million) of new loans for stock investment in May, about six times that of January, according to the Yingcan Group (盈燦公司), which tracks the nation’s more than 2,000 peer-to-peer finance platforms.
“This is a move by the government to tighten regulation of the industry, particularly for smaller companies,” Yingcan chief executive officer Xu Hongwei (徐紅偉) said. “We’re waiting to see the details expected later this year, such as the minimum required capital for entry.”
The People’s Bank of China (PBOC) is to supervise online payments while the China Banking Regulatory Commission is to oversee online lending, trust and consumer finance.
The China Securities Regulatory Commission (CSRC) is to handle equity crowd-funding and online fund sales, while insurance is to be looked after by the China Insurance Regulatory Commission.
Peer-to-peer Web sites which match borrowers with lenders, should serve only as intermediaries and are banned from “enhancing borrower credit worthiness” or raising funds illegally, according to the new rules. Online crowd-funding must not “mislead or cheat investors.”
The PBOC added that Internet finance activities were bringing new problems and risks as there were “no market entrance thresholds, no game rules and no regulatory oversight.”
It plans to set up an Internet finance association and also support financial institutions starting online businesses including in banking, insurance and securities-related offerings.
The rules were drafted by 10 Chinese regulators and ministries, including the Ministry of Public Security and the Cyberspace Administration of China. It is the first set aimed at taming Internet finance at a time of rising risk.
Yingcan estimates that 1,500 of the platforms might go bankrupt or have difficulty paying dues, up from 275 last year, while Dagong Global Credit Rating Co (大公國際) has put more than 1,300 peer-to-peer companies on a blacklist that flags them as too risky and opaque.
The CSRC last weekend said it would stop online lenders from handing out new loans for share purchases, blaming some “information technology service providers” for illegal practices that it said contributed to the stock plunge.
There are to be additional strings on Internet finance firms, such as a minimum capital base and parking of reserve funds with regulators, Peking University Finance and Industry Development Research Center secretary-general Huang Song (黃嵩) said.
“Putting so many regulators in charge of each section of online finance is an old approach,” Huang said. “The government is trying to use a conventional approach to regulate this most unconventional business. Instead of encouraging the new online firms, they are just pushing existing financial institutions to embrace the Internet.”
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last