China’s Central Bank Encourages Greater FinTech Innovation
Given China’s commitment to the robust regulation of technology, this announcement sets the tone to foster more ICT innovation. China’s central bank, People’s Bank of China (PBOC), along with its financial regulators and the Zhejiang provincial government is encouraging the industry to spur Financial Technology (FinTech) innovation, a government notice detailed. However, the government regulators made sure to qualify these innovations as done within the context of “controllable risks”. That means the country’s e-commerce hub and the leaders of the industry must ensure that they proceed within set parameters.
The technological innovation capability of financial services should be improved. Under the premise of controllable risks and voluntariness, banks are encouraged to deepen cooperation with external investment institutions and actively explore diversified financial service models for scientific and technological innovation.
– Draft Plan of the People’s Bank of China
It’s a timely announcement. The draft comes eight months after Zhejiang, home to one of China’s e-commerce giants, began work on a “common prosperity” pilot zone to address China’s goal of greater wealth distribution.
To a large degree, it should a boost in the arm for FinTech leaders of the Asian nation. The remarks promoting a greater appetite for risk are in direct contrast to the firm hand Beijing employed to regulate Artificial Intelligence (AI) and other emerging technologies in the country in the past months.
During those months, financial innovation in China’s growing FinTech market trickled down as the industry had to do some soul-searching to reorient itself. Despite all that, however, digital mobile payments have continued to grow in China. The industry didn’t buckle under pressure and it generated 126 trillion yuan (US$19.9 trillion) in transactions in the third quarter of 2021 alone, according to the PBOC.
Still, the recent announcement can be viewed as a signal for growth, albeit measured. The central bank document clearly stated as its guiding principles that “financial opening-up and innovation need to be driven steadily under the premise of effective regulation and controllable risks”.
It is under these principles that banks are encouraged to “fully utilise the synergy with their subsidiaries to provide continuous financial support for science and technology enterprises”, the notice said. Additionally, the draft supports innovation in intellectual property insurance and better coverage of technology-related insurance.
Another welcome aspect of the notice is that it promotes investments from outside of the country. That is one interpretation of the clause to “deepen cooperation with external investment institutions”. For industry leaders, that should mean closer ties with the regulator so as to be unequivocal.
The government is also looking to support the industry with two new bureaus for tech innovation and social responsibility, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) detailed.
Moreover, the measures implemented in Zhejiang’s pilot project are expected to be rolled out across the country once proven effective. As an official of the National Development and Reform Commission described it: “Examples are expected to be set up for other regions to roll-out step by step so that common prosperity for all people can be achieved gradually.”
The steps China is taking in its digital transformation can be described as measured. Still, the results speak for themselves. As the recent 2022 Winter Olympics in Beijing showed, the Pacific nation is awash in the latest technology. The games may not have the in-person audience that they should have attracted but it revealed how much the quest for Industry 4.0 can change lives.
As reported on OpenGov Asia, emerging technology has been useful in medical research as China’s medical team utilised AI to track the spread of cancer — and save countless lives in the process.