Internet Finance: A Hot Topic at the CPPCC

By staff reporter ZHU HONG

China's Internet finance has expanded tremendously since July, 2013. Within a short time, many companies specializing in e-business, search engines, or social media have emerged. There now exist three kinds of Web based financial services — on-line payment, e-financing and investment products. Internet commerce is also a hot topic among financial experts at the second session of the 12th CPPCC National Committee.

Li Daokui, CPPCC member and economist at Tsinghua University, believed that Internet finance needs to be under stricter oversight. According to Li, off-line finance aims at large scale financial projects, while online finance focuses on small ones. The two are mutually complementary, he explained, but more regulations are required for the latter.  

"On-line finance is to a great extent influenced by market expectations." Li said. "Once negative expectations appear, their effects can spread rapidly on the Internet and cause financial tremors. And once a panic begins, financial products could spiral downwards into an inescapable crisis."

Wu Yan, CPPCC member and Board Chairman of the People's Insurance Company of China, believed that there are latent risks in the rapid progress of Internet finance, and stressed the importance of effective supervision of Web based finances. He proposed a unified supervisory system for on-line and off-line finance, strengthening protections for the rights of Internet financiers and establishing guarantee funds for them.  

Meanwhile the All-China Federation of Industry and Commerce plans to put forward a proposal on regulating and guiding Internet finance to promote its healthy and orderly development. The proposal suggests that supportive policies should be given to creative financial service institutions. These institutions would enjoy the same tax status as banks and stock exchanges. According to the new proposal, relevant policies can be formulated in light of those for emerging industries. Further, preferential policies should be established to enhance Internet development and to improve information services in areas with high concentrations of financial service providers.