According to sources, China is planning to impose regulations on tech giants to share consumer loan data as a measure to avoid beyond the limit borrowing and fraud. This can be looked upon as an approach that would put an end to the government’s laissez-fair approach towards the industry.
The Chinese government is likely to impose rules over the internet platforms asking them to provide their vast loan data to a few nationwide credit agencies. These forms of data will be shared by the People’s Bank of China with other banks and lenders for the purpose of being able to evaluate risks and avoid excessive borrowing. These plans conform to the Chinese government’s motive of tightening scrutinisation of the privatised companies residing in China.
Earlier, China’s National Development and Reform Commission along with Ministry of Commerce (MOFCOM) had made an announcement of a new regime which is a set of 23 rules, that covers the investments made by foreign entities in military sectors and acquisitions made by the same in sectors such as that of natural resources, agriculture, cultural products and services, energy, financial services and internet technology. All of this requires a ‘foreign system’ to go through an approval process before they can invest on national security grounds. Firms with business in China are likely to face further regulatory obstructions with respect to significant transactions.
In a recent event, the US had listed 59 Chinese firms including Semiconductor Manufacturing International Corporation, a major Chinese chipmaker brand, as a part of advancing export control over these based on national security concerns. China has often alleged the US for having abused this concept of ‘national security’ and had also posed a fitting response to India over its ban on Chinese apps, following the tension at the Ladakh border.
This change brought about a significant fall in the fintech giant Ant’s IPO in November, worth $37 billion. Following these events, an antitrust probe was launched by the Chinese government into the fintech company’s former owner Alibaba, significantly impacting its lending and several other consumer finance businesses.