Chinese regulators have summoned at least 13 internet platforms whose finance divisions are growing at a fast pace. Wide-ranging restrictions have been imposed on these companies, including ByteDance and Tencent. The move is part of China’s effort to rein in a massive internet ‘platform economy.’ Several of the curbs imposed on these companies are the same as those against Jack Ma’s Ant Group. These companies are involved in a whole range of e-commerce activities ranging from food delivery to banking and shopping. This has resulted in the rapid growth of the platform economy in China. The other companies that were summoned included units of Meituan, Didi, and JD.com. Several watchdogs including the central bank of China were part of the meeting.
The watchdogs have spelled out a range of requirements and stricter compliance that these companies need to follow while listing abroad. The watchdogs have also imposed curbs on information monopolies. Commenting on the development, the People’s Bank of China said that internet platforms of China have an important role to play when it comes to improving the efficiency of financial services. “Internet platforms have also helped in broadening the access of financial services to the larger number of people. But at the same time, some of them are involved in serious violations of the rule. Some of the financial services were running without licenses. They were also found to be involved in regulatory arbitrage and unfair competitions that were ultimately damaging interests of consumers,” it said.
In a move that tightens capital requirements, these internet platforms will have to set financial holding companies if they are found to be fulfilling all the requirements. as Alibaba’s fintech affiliate Ant Group was recently asked by Chinese regulators to do the exact same thing. Apart from this, these companies will have to draft ‘business rectification’ plans. In order to make sure that they follow all the rules and regulations, they will have to cut all improper links between financial products and payment tools. All 13 companies have also been asked to be more compliant with their issuance of asset backed securities. Tencent and ByteDance have not reacted to the development yet.