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Chinese officials have told 13 of the country’s largest technology companies to “rectify major issues” on their platforms, a sign that regulatory pressure on the fintech sector extends beyond Jack Ma’s Ant Group.
Tencent, ByteDance and Baidu’s fintech affiliates, JD.com, Meituan and Didi were part of the group convened for a meeting with officials of the People’s Bank of China and other banking, securities and foreign exchange regulators, according to the state agency Xinhua news.
Ant Group, that was ordered restructuring this month, it was not reconvened.
While praising the “globally positive” development of the fintech technology sector in recent years, regulators complained of anti-competitive practices and harm to consumers.
Officials demanded that the platforms increase their capital to cover 30% of the loans they offer jointly with the banks, after imposing similar changes on Ant. The measurements were in line with the recent guidelines issued to the broader fintech technology sector.
Analysts have warned that the rules would increase financing costs for larger fintech technology companies and lead to a significant reduction in the sector. But they added that some smaller players could enjoy it more opportunity to expand.
“Inadequate links” between payment services and other financial services must be broken, regulators said. This included not allowing payment platforms to promote loans too aggressively, cutting off a major advertising channel for businesses.
Officials also called for increased transparency on transactions. Unlike the state-owned traditional banking sector, mobile payment platforms like Tencent’s WeChat Pay, Ant’s main competitor, share far less transaction data with the government.
Companies must also apply for personal credit reporting licenses to “break data monopolies”. Only two government agencies own these licenses and it was unclear what the government requirements for private companies would be to issue licenses.
Regulators also demanded that platforms improve financial risk management when making loans and investments.
Shares of Chinese technology groups trading in Hong Kong fell on Friday morning. Meituan fell 3.1%, Tencent 1.4% and JD.com 2.8%.
Regulators stopped Ant Group last year offered an initial public offering of $ 37 billion, which would have been the largest public list in the world. Jack Ma, founder of Ant and one of China’s best-known businessmen, has largely disappeared from view since the listing escaped.
It seems that Beijing is now extending his scrutiny to other Chinese technology companies, which have increasingly ventured into financial products.
WeChat Pay and Alipay, Ant’s payment app, were launched as a way for users to buy goods and services, but have become platforms that offer loans, investments and insurance.
JD.com, the online retailer, also has a consumer credit arm, while vehicle launcher company Didi launched crowdfunding and loan products in 2019.
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