Fintech regulation in China

Abstract

Fintech, a portmanteau combining “finance” and “technology,” has been a buzzword in recent years, due to its great potential for reshaping the financial landscape and society in general. The important question is thus how to develop a fintech market. The influential “law and finance” literature has taught us that law matters.1 Indeed, one of the key success factors for developing a robust fintech market is an effective regulatory regime that ensures investor protection while encouraging market innovation. As a leader in fintech and the second largest economy in the world, China’s regulatory experience is of both academic and practical significance. There are a number of interesting questions to be answered: What are the factors that have contributed to the growth of the Chinese fintech market? Are the lessons from the Chinese model replicable in other markets? Is the growth in the Chinese fintech market sustainable? If so, how? In Fintech Regulation in China, Professor Robin Hui Huang has done a sterling job of answering the questions above. As a leading authority on Chinese corporate and financial law, Professor Huang masterfully provides a comprehensive examination of China’s fintech regulation in a clear and convincing manner. The book not only examines the black-letter law, but also analyses the interactions between factors that contribute to the formation and implementation of China’s fintech regime. Moreover, in evaluating fintech regulation in China, the book undertakes a comparative analysis to cover some other major fintech markets, such as the US, the UK, Singapore, and Hong Kong. It is an extraordinary endeavour to do so, as fintech regulation is highly complex and rapidly evolving. In China, for example, the fintech regime comprises many national laws, regulatory rules issued by a multitude of regulators at the national and local levels, guidance documents of various self-regulatory organizations, as well as court cases. Professor Huang beautifully accomplished the otherwise formidable task, thanks to his rich diversity of backgrounds and experiences in China and overseas. He has an admirably deep and sharp understanding of how Chinese law functions as well as how it compares to the rest of the world. The book is well organized with nine chapters. Chapter 1 usefully introduces the Chinese regulatory framework for the fintech market, including the central bank, namely the People’s Bank of China, the national sectors-based regulators such as the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as the self-regulatory organizations and local regulators. As fintech is an evolving concept and covers a wide range of sectors, the book carefully selected some more significant fintech sectors as case-studies, namely online P2P lending, cryptoassets, initial coin offerings, mobile payments, data protection, robo-advisory, equity crowdfunding, and central bank digital currency. They are all well chosen because there are examples of success stories as well as lessons of failures, so as to present a multifaceted view of China’s fintech regulation. Chapter 2 focuses on the regulation of online P2P lending in China. China’s online P2P lending business, as an important component of fintech market, was once very popular with more than 3,000 platforms at its height, but by the end of 2020, it had been completely wiped out from the Chinese financial landscape. This chapter traces the development and regulation of online P2P lending in China, with a view to finding out what factors