On top of the government’s reform agenda is to open up more state-owned sectors including finance, telecoms and the railway industry to more private investment. Our reporter Guan Xin explored the trend of how internet companies are now venturing into the financial sector, and concluded that while the trend of freeing up China’s financial market is inevitable, the road will be bumpy.
A bold step into the financial sector hopefully one in the right direction.
Several well-known private companies have pushed into the financial industry, a sector long guarded by the state.
"Our goal is to provide investment service with an easy and fast experience. Everyone should be able to invest. Financial products should not have high threshold and stay far away from ordinary people." Liu Chao, Financial Business Dept. Manager of Alibaba Small & Micro Financial Services Group said.
Traditional banks, mostly state-owned ones, however, may view them as a threat. Particularly troubling to state banks is the competitive return that these new players offer on deposits.
Competing directly with state firms, especially with the likes of ICBC, the world’s biggest bank, seems like a daunting task for private firms. Despite the positive reaction from the market, private internet finance could find itself mired in regulation if it steps too far into the territory.
After the intervention of the Chinese Securities Regulatory Commission, Baidu took the "8% guaranteed annual return" out from its marketing slogan.
"Constraints are not a problem. To me constraints sometimes mean opportunities." Gu Yunling, Chief Risk Officer of Turbo Financial Group said.
Despite lacking clear rules, the government still has good reason not to stamp out the green shoots of the industry just yet.
The new trend draws great attention, not just for the future of online financing, but for the life of private business in China and the calibre of real reform currently underway. But the foray of internet companies into the financial sector despite huge risks, is living proof that the opening up of predominately state-owned industries to private capital is an inevitable trend.
Source: CCTV
