Author: Fan Gang, President, CDI
Editor’s Note: Internet finance, while injecting new vitality into economic development, has also brought with it inevitable risks, which calls for new models of internet finance regulation.
Online shopping, internet finance and telecommunication technologies have brought various benefits to the Chinese economy, such as fueling the development of the manufacturing sector, providing financial support for small and medium enterprises, and promoting consumer finance. Compared to developed countries, China’s internet finance is developing well. There are several reasons for this. First, the relative backwardness of China’s commercial and financial industries in the past created a huge space for the emergence of internet finance. Second, Chinese consumers’ awareness of privacy protection is not as high as their counterparts in western countries. Third, the Chinese government has adopted a tolerant stance towards innovation, entrepreneurship, the application of new technologies, as well as new business patterns and models, facilitating the growth of internet finance. In addition, China’s vast consumer market has provided excellent opportunities for growth.
The development of internet finance has pros and cons, which, while creating benefits, has also brought negative impacts such as phishing and fraudulent activities, etc., all of which have made regulation on internet finance highly relevant. We need to adopt a mixed supervision system which can penetrate into different industries related to internet finance. Moreover, the partnership between governments and enterprises shall also be encouraged. Moderate and effective regulation by the government will help businesses develop better. As the regulator and the regulated share common interests, their partnership and collaboration will contribute to forming a self-disciplined regulation mechanism, which is in the interest of the long-term sound development of China’s internet, e-commerce, and electronic finance, etc.