China is home to multiple fintech giants, from Ant Financial to Lufax, and yet the Chinese government appears to have mixed views on how far it is willing to allow fintech to go before it yanks on the leash.
Most conspicuously, China is dealing with a proliferation of so-called "bad" P2P lenders, from platforms engaged in outright Ponzi schemes (Ezubao), to those experiencing rising non-performing loans. This has forced it to rein in more adventurous (and potentially detrimental) sectors and participants.
Yet, this hasn't stopped the Chinese government from pressing on with regulations intended to benefit the burgeoning fintech sector, suggesting that the Chinese government is crafting a nuanced regulatory environment.
Few words fill banks with more dread these days than fintech, the growing bevy of unregulated upstarts mucking about in their business patch. In China, where lenders have quite enough on their plates, they must be feeling positively schizophrenic. On the one hand, Beijing is cracking down on peer-to-peer lenders and crowdfunding operators. On the other, authorities are letting the payment platforms of tech giants Alibaba and Tencent raise more money. Lufax in January completed a fundraising round that values it at $18.5 billion.Once encouraged as an easier way for small-business owners to raise capital, P2P lenders have, at least in some quarters, fallen out of favor. About 1,000 have gone belly up, most notably Ezubao, whose executives squandered almost $8 billion, including 12 million yuan ($1.8 million) on a pink-diamond ring.