While the plan is useful in continuing to regulate China’s growing financial landscape, it does nothing to alter China’s trajectory of channeling funds to the state sector.
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After a period of rapid growth, strong fintech regulation is on the rise in China. The scale of third-party payments has increased from 13 trillion RMB in 2013 to 300 trillion RMB in 2019, while internet wealth management has grown from less than 1 trillion RMB in 2013 to over 5.5 trillion RMB in 2018. However, some fintech firms have engaged in improper activities, using financial instruments such as P2P lending, microfinance, and asset-backed securities. This has allowed them to achieve excessive leverage or even fraud, creating systemic risks. Indeed, China’s 2020 Government Work Report stated that the supervision of fintech firms is necessary to ensure that innovation occurs under proper regulation.