China Says Crackdown on Fintech Not Aimed at Specific Firms

(Bloomberg) -- China’s banking regulator said recent measures to rein in financial technology firms that have hit hard at giants such as Jack Ma’s Ant Group Co. weren’t aimed any specific company and have been well received by some in the industry.

Some of the firms have a “relatively positive attitude” toward the new requirements and have achieved “initial effects” in their “rectification” efforts, Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission, said at a briefing in Beijing on Friday, without being specific.

Officials have unveiled a string of new rules to curb its booming financial technology industry and prevent any one firm from becoming too powerful. The measures upended a $35 billion initial public offering by Ant Group in November, and authorities have ordered the firm to return to its roots as an online payment provider.

The new rules, designed to prevent monopolies from being formed as well as unfair competition, are in line with supporting the long-term stable development of private enterprises, Liang said. By taking their own measures, internet platforms can return to a role of serving the real economy and “become an important force” in supporting economic growth, he said.

Banks and insurers should continue to cooperate normally with internet platforms in compliance with laws and regulations and some lenders that have pulled back should correct their behavior, he said, without elaborating.

At the same briefing, the regulator’s chief risk officer, Xiao Yuanqi, said officials are monitoring risks at firms engaged in crowd-funding in the health-care sector and will take “corresponding measures.”

A decision by Meituan to shutter its operations in the field at the end of this month was due to risks in deviating from its main business, he said.

Yin Ming, the architect of Ant’s mutual aid insurance program Xianghubao -- which means protect each other in Chinese -- has resigned. “We appreciate his contributions to the company,” Ant said in a statement on Friday.

Link to this story Jack Ma Is Selling Cancer Coverage for Pennies a Month in China

Separately, China’s central bank on Friday announced that non-bank payment firms will need to start placing their reserves at the bank or with eligible commercial banks and that transfers of reserves should be conducted by qualified clearing houses. The regulations will go into effect on March 1, but companies will have a six-month grace period to fully comply.

Financial innovation is a “double-edge sword,” Guo Shuqing, chairman of the regulator, wrote in an article in December. China plans to impose “special and innovative regulatory measures” on financial technology firms to eliminate monopolistic practices and strengthen risk controls, he said.

(Updates with details of Ant’s Xianghubao exec quitting in eighth graph)