China’s fintech regulatory program was established in 2017 and gradually implemented in 2018. This report provides an overview of China’s fintech regulatory program. To write this report, researchers from XIN Real Estate Fintech Research Center, THUIFR firstly collected and analyzed all fintech regulatory policies since 2018, including documents, announcements, meeting minutes, speeches issued by central agencies and ministries, specific implementation measures issued by provincial and municipal governments, and academic papers and reports. Secondly, the researchers sought to identify the relationship between the central government's programmatic documents and specific measures of local governments, including how local governments implement the guidance of the central government. Thirdly, this report aims to provide a reliable basis for policy evaluation, academic research and regulatory feedback.
Regulatory policy of Blockchain
Local governments at all levels actively support the development of blockchain technology. Supporting policies issued by provincial governments include:
Jiangxi Province promoting the use of big data, cloud computing, blockchain and other fintech to develop green finance.
Liaoning, Gansu and Guizhou Provinces have implemented relevant policies, including studying the use of blockchain, AI and other emerging technologies such as an improved credit evaluation system and improved industry supply chain credit evaluation standards.
Anhui Province encourages the use of open source code to develop personalized software, carry out pilot applications of new technologies such as blockchain and AI with the aim of accelerating the development of industrial control, intelligent factory and other emerging applications.
Shandong Province has sought to standardize the development of new financial technologies in Internet finance, blockchain, AI and other fields. To ensure compliance with laws and regulations and to control risks, the government is seeking to use modern fintech such as the Internet, the Internet of things, AI, big data and blockchain to improve the efficiency and level of financial services. Hebei province had also issued a series of policies to support and develop the blockchain industry.
Specific measures issued by local municipal governments
The Shanghai government has promoted educational demonstration applications based on AI and blockchain technology.
The Chengdu government has emphasized the innovation of institutional mechanisms, including through institutes and discipline management. The Chengdu government is seeking to progress medical, AI, blockchain, large energy, intelligent manufacturing, Internet data applications, genetic engineering, digital creative intersection areas. This includes building an industry (technical) innovation center, a manufacturing center, an engineering research center and new industrial technology research institute. Further Chengdu is seeking to develop application innovation platforms and networks, outstanding interdisciplinary and collaborative innovation, and to promote cross-border integration of disruptive innovation activities.
Supervision policy for digital currency and virtual currency
As one of the applications of blockchain technology, cryptographic assets such as bitcoin and Ethereum have attracted wide attention and spawned many cryptographic asset trading platforms, and new financing models such as Initial Coin Offering (ICO). According to the People's Bank of Chin, there are many problems and challenges in encrypting assets
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Regulators should follow the principle of "technology neutrality", implement supervision according to the nature of financial business, and maintain fair market competition. Regulators should also conduct timely inspections of fintech and Internet financial business to prevent illegal and illegal financial business being conducted in the name "technology"; Regulators should also strengthen the supervision over the cooperation between financial institutions and technology enterprises, and strengthen the control over it risks, outsourcing risks and other operational risks. Further, the government should continue to strengthen follow-up research, monitoring and analysis and ensure professional knowledge, personnel and policies are preserved.
The industry self-discipline association cooperates with the supervision
The National Internet Finance Association of China calls on consumers and investors to better understand the nature of relevant models, enhance their awareness of risk prevention, make rational investments and not blindly follow the trend of speculation. It calls on investors to recognize the risks of overseas ICO and "virtual currency" trading platforms and firmly establish the awareness of risk prevention. Members of the National Internet Finance Association of China shall abide by the industry self-discipline commitment, take the initiative to boycott illegal financial activities, and shall not participate in or organize any activities involving ICOs and "virtual currency" transactions.
Regulatory policies on Internet finance
On October 10, the People's Bank of China, the China Banking Insurance Regulatory Commission and the China Securities Regulatory Commission jointly issued the “Trial Administrative Measures on Anti-Money Laundering and Anti-Terrorist Financing of Internet Financial Institutions”. The Measures made it clear that the People's Bank of China and the relevant financial supervisory and regulatory institutions under the State Council should coordinate their supervision with the self-regulatory management of mutual fund associations, so as to ensure that their respective functions have their own emphases and their work is coordinated with each other. At the same time, the government should give full play to the management role of mutual fund association and other industry self-regulatory organizations, and use the power of self-regulatory organizations to urge practitioners to strengthen the construction of internal control, enhance the awareness of anti-money laundering, and improve the effectiveness of supervision. Secondly, the Measures identified the need to establish an effective regulatory framework for the entire industry. The government should conscientiously implement the national plan for combating Internet financial risks, crack down on Internet financial disorder, and crack down on illegal activities such as providing payment services for illegal transactions by standardizing economic and financial supervision.
