BEIJING Dec 5 China's central bank will closely
monitor the development of Internet financial services to ensure
companies do not cross any legal red lines, a senior central
bank official said on Thursday.
Internet financing and traditional banking services
complement each other, Liu Shiyu, a vice central bank governor,
said in a speech published on the central bank's website,
"We will encourage internet financial innovations and
tolerate mistakes. But we will not tolerate fraud and other
criminal activities," Liu said.
Financial scams have multiplied in China as individual
wealth grows, while a lack of financial knowledge and education
means many people do not know how to protect their money.
Concerned at the potential for trouble, the government
launched a crackdown on advertisements for financial scams in
August, while a separate campaign against
pyramid schemes begun in June led to the arrest of 560 people,
according to the Ministry of Public Security.
China's finance sector has been dominated by state banks,
who traditionally focus on larger companies over the needs of
smaller firms and individuals, leaving few options.
But Internet companies, including Alibaba Group Holding Ltd , Baidu Inc and Tencent Holdings Ltd
, have started using their platforms to push financial
products developed by finance management firms, looking to fill
this gap in the market.
Retailer Suning Commerce Group Co Ltd has also
moved into Internet finance, while Ping An Insurance Group Co of
China and China Minsheng Banking Corp
have both been collaborating with Internet companies.
Alibaba's fund sales platform Yu E Bao, or "leftover
treasure", is this year's most successful fund launch in China,
attracting more than 100 billion yuan in funds under management
and more than 30 million subscribers as of 15 November.
Liu said Internet companies "cannot engage in illegal
fund-raising activity, cannot take public deposits illegally -
these are two legal 'red lines' they cannot touch." He did not
Liu added that peer-to-peer (P2P) companies cannot set up
"fund pools" and cannot make loans or provide guarantees for
other borrowers at the same time. He did not elaborate.
The central bank will team up with other financial
regulators and the police to crack down on fraud and other
criminal activities on the internet, Liu said.