FINSERV
CROSS BORDER BALANCE : FINTECH IN CHINA
New regulations for fintechs in China are re-shaping the space . We spoke to LianLian Global CEO David Messenger to find out more
WRITTEN BY : JOANNA ENGLAND
At the beginning of 2021 , China ' s GDP was conservatively estimated to be $ 15.66trn . Experts also forecast that its economy will overtake the US in less than decade due to its growth momentum , and become the world ’ s largest economy .
But over the past few months , Chinese regulators have taken significant steps to restrict the largely unfettered fintech activity that has boosted the economy .
China ’ s approach to regulating fintech has been three-fold . Firstly , financial businesses must be licensed to operate . Secondly , different businesses such as insurance and wealth management must set up firewalls to prevent cross-sector risks . Finally , the direct link between non-banks and banking information services must be cut .
The central bank has also required fintech businesses to set up holding companies and to include all subsidiaries engaged in financial activities .
A series of strict measures on fintech regulation have also been implemented . On November 1st , China ’ s new law on personal data protection came into effect . In September the Data Security Law was introduced , and in January , the central bank tightened its regulation of non-bank payment providers , effectively restricting their activities in the swiftly growing payments sector .
The previously free-wheeling fintech space seems to have been reined in with sudden effect and commentary in the space shows some companies have felt the pinch .
“ I think the key issue going forward will be , how to embrace those new e-commerce channels ”
DAVID MESSENGER CEO , LIANLIAN GLOBAL
56 January 2022