In China, there is no singular regulatory body overseeing fintech products and services. Instead, various financial services are governed by different regulatory agencies. The key authorities include the People’s Bank of China (PBOC), the China Securities Regulatory Commission (CSRC), and the State Administration for Financial Regulation (SAFR), which replaced the China Banking and Insurance Regulatory Commission (CBIRC) in May 2023.
Post-restructuring, the SAFR manages all financial sectors except securities, while the CSRC handles capital markets, including the approval of corporate bonds. The PBOC remains responsible for currency policies.
Licensing Requirements for Financial Activities
Certain financial activities in China necessitate a licence, including securities brokerage, investment consulting, deposit-taking, foreign exchange transactions, insurance operations, fund management, and payment services. Notably, pawnbroking falls under the Ministry of Commerce’s oversight rather than financial regulators.
Consumer Lending Regulations
Consumer lending is tightly regulated in China, with companies needing approval from the PBOC and registration with the State Administration for Market Regulation to engage in this activity. Regulations such as the General Rules of Loans and Consumer Finance Measures govern lending practices, and consumer finance companies must be approved by the SAFR.
Secondary Market Loan Trading
Trading loans in the secondary market is permitted but subject to strict regulations from the SAFR, including borrower consent and the transfer of all outstanding amounts. The SAFR has also piloted programmes for trading non-performing loans, further regulating this market segment.
Collective Investment Schemes and Alternative Funds
The regulatory framework for collective investment schemes in China is governed by the Securities Investment Fund Law, with the CSRC as the primary regulator. Public and private funds are both subject to stringent oversight. While peer-to-peer lenders and crowdfunding platforms do not fall under this law, managers of alternative investment funds are regulated depending on the type of assets managed.
Peer-to-Peer Lending and Crowdfunding
Peer-to-peer lending in China, once a booming industry, has seen a sharp decline due to links with illegal fundraising. The government issued numerous regulations between 2017 and 2019 to curb industry abuses, and by 2020, most platforms had ceased operations. Crowdfunding also faces scrutiny, with authorities cracking down on its misuse for illicit capital raising.
Regulation of Payment Services
Non-banking payment services are regulated by the PBOC. Providers must obtain a payment licence, and for cross-border transactions, they require additional approval from the State Administration of Foreign Exchange. Since 2015, no new payment licences have been issued, with PayPal and Airwallex among the few overseas firms to acquire existing licences.
Open Banking and Data Sharing
While China has no specific open banking regulations, there are initiatives to promote secure data sharing, such as the PBOC's financial industry standard for API security. The 2022–2025 Fintech Plan suggests that China will continue to explore data-sharing mechanisms across industries.
Insurance and Credit References
Fintech companies offering insurance products in China must adhere to regulations such as the Internet Insurance Business Measures. Credit references are also highly regulated, with personal credit services requiring approval from the PBOC and adherence to strict data protection laws.
In summary, fintech regulation in China is comprehensive and continues to evolve, particularly with regard to new financial technologies, data security, and market supervision.
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