China launches next stage of fintech plan

As predicted in our Fintech Global Year to Come 2022 & Year in Review 2021, People's Bank of China has now circulated the new fintech development plan for the next four years covering 2022 – 2025.

The first fintech development plan for the years 2019 – 2021 aimed to build up the fundamental structure for mainland China’s fintech development. This target had been generally reached by the end of 2021. As such, the new fintech plan focuses on further digitalisation of the finance industry and the prudential regulation of the fintech ecosystem.

Specifically, the new fintech plan sets out eight specific missions for the next stage of fintech development in an economy almost 40% of which is underpinned by digital commerce. These objectives cover governance, data capability, infrastructure, industrial application, innovation, digitalisation of financial services, regtech and talent development. To realise each specific mission, the plan also raises five supporting measures, including pilot programs, support capabilities, monitoring and evaluation, environment establishment and interaction between financial regulators, financial institutions, fintech operators and social organisations.

If the plan has been successful by 2025, China predicts massive growth in the deployment and core competitiveness of fintech as part of its market infrastructure as a whole. To achieve well-rounded and balanced development, we expect the Chinese authorities to focus on, among others, the “low-hanging fruit” of relative weak points and/or less-developed areas of the fintech industry. For example, China’s “fintech regulatory sandbox” might further expand into less-developed regions of China and more financial sectors. Indeed, it was only last year that China’s securities regulator – the CSRC – launched a separate fintech regulatory sandbox program to foster the country’s capital markets, following the initial fintech regulatory sandbox program launched in 2020 by the People’s Bank of China which mostly involved the banking sector. 

What is certain though is that regulators will maintain focus on data compliance, consumer protection and antitrust issues in the fintech industry, and more detailed regulatory rules on fintech are expected to follow as lawmakers seek to catch up with the speed of advances in AI, big data, cloud computing, blockchain and other drivers of growth in the Middle Kingdom.