Chinese Financial Authorities Emphasize the Need to Regulate Giant IT Companies like Alibaba

Comprehensive Regulation of Fintech Finance Like Traditional Banks
Braking Before the Situation Becomes Uncontrollable

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Chinese financial authorities have emphasized the need to regulate major Chinese IT companies such as Alibaba. This is interpreted as an intention to put the brakes on companies like Alibaba, Tencent, and Meituan before they reach an uncontrollable situation.

According to the Hong Kong South China Morning Post (SCMP) on the 12th, Liang Tao, Vice Chairman of the China Banking and Insurance Regulatory Commission, stated that fintech companies should be subject to regulations equivalent to those applied to banks.

At a financial forum held in Beijing the previous day, Vice Chairman Liang said, "Fintech has improved the efficiency of financial services but fundamentally has not changed the essence of finance," adding, "Financial activities of fintech should be subject to comprehensive regulations like those for banks."

SCMP explained, "Liang’s remarks came after Chinese financial authorities frustrated Ant Group’s record-breaking initial public offering (IPO) citing regulatory changes, clearly signaling the authorities’ intention to strengthen regulations on the world’s largest fintech market."

Chinese financial authorities announced the sudden postponement of the IPO of Ant Group, Alibaba’s fintech affiliate, just two days before its planned simultaneous listing on the Shanghai and Hong Kong stock exchanges on the night of the 3rd.

While both Chinese financial authorities and Ant Group explained the postponement was due to 'regulatory changes,' the market interpreted it as a warning to Jack Ma, who had criticized the authorities.

On the 10th, the State Administration for Market Regulation of China released a draft of antitrust guidelines targeting technology companies. These guidelines focus on large internet-based corporations, regulating acts such as sharing sensitive customer data, colluding to eliminate competitors, and providing services below cost through subsidies as antitrust violations.

Following the announcement of the antitrust guidelines on the 11th, the combined market capitalization of five leading Chinese IT companies?Alibaba Group, Tencent, Meituan, JD.com, and Xiaomi?declined by approximately $260 billion (about 294.32 trillion KRW) over two days due to stock price drops on the Hong Kong stock exchange.

In this context, a Chinese financial authority official emphasized the necessity of strengthening fintech regulations.

Vice Chairman Liang stressed that China’s fintech industry is still in the early stages of digitalization and that supervision must be strengthened to eliminate risks that excessive innovation detached from the real economy could undermine financial market stability.

SCMP reported that this aligns with recent remarks by Wang Qishan, Vice President of China.

At the 'Waitan Financial Summit' held in Shanghai on the 24th of last month, Vice President Wang likened fintech services detached from the real economy to "water without a source, a tree without roots."

Some speculate that the Chinese government, having tacitly allowed monopolistic market practices by domestic internet companies until now, is now announcing antitrust regulatory measures targeting Alibaba.

SCMP explained, "Chinese financial authorities have imposed restrictions on the runaway fintech industry to prevent potential risks."

This content was produced with the assistance of AI translation services.