China UnionPay Launches Its Own Credit System
On November 6th, China UnionPay’s QuickPass app (银联云闪付) launched a new function called "Living Score" (全民生活分). The Living Score is based on the user's identification information, browsing behavior, and consumption behavior across multiple dimensions. More specifically, the behavior information includes the consumption data created in the QuickPass app and its bound bankcards. In the future, when clients’ Living Score reaches a certain point, they will be offered a deposit-free option in the renting service. Currently, Ant Group, Tencent and JD.com all have their own credit systems.
JD Digits Signs Strategic Cooperation Agreement with Haitong Securities
On November 9th, JD Digits and Haitong Securities signed a strategic cooperation agreement in Beijing. Haitong Securities was founded in 1988 as one of China’s earliest securities companies. Its business covers complete financial services including brokerage, investment banking, M&A, asset management, funds, futures and PE investment. The two parties have previously cooperated in various business sectors such as Fixed Income, Currency and Commodities (FICC) and wealth management. JD Digits plans to further collaborate with Haitong in the fields of investment banking and industrial research, thereby jointly creating new momentum for digitalization.
The First Batch of Eight Projects for Fintech Sandbox Trials in Shanghai Complete Registration
On July 21st, the PBoC’s Shanghai branch issued a list of eight projects proposed for inclusion under Shanghai’s fintech innovation regulatory trials (金融科技创新监管试点) for feedback from the public. The eight projects were officially registered and approved on November 3rd to provide services to the public. Included are “Shanghang Puhui” non-contact financial services launched by the Bank of Shanghai, smart supply-chain financial services based on artificial intelligence launched by the Shanghai Huarui Bank, and “Xinmenglian” (信盟链) risk information coordination sharing product, launched by CCB Fintech.
China Issues Draft Rules to Restrain Online Micro-Lending
On November 2nd, the PBoC and the CBIRC issued draft rules to tighten oversight of online micro-lending as it tries to rein in rising debt levels in the economy. Under the draft rules, small online lenders would be required to provide at least 30% of any loan they fund jointly with banks. In addition, regulators set a RMB 5 billion (USD 748 million) registered capital threshold for micro-lenders that offer loans online across different regions. The current threshold varies between provinces but is well below 1 billion yuan. Lenders will have 12 months to comply with the new rules once they become official.
Tencent Cloud Signs Cooperation Agreement with Xiamen International Bank
On November 5th, Tencent Cloud and Xiamen International Bank signed a strategic cooperation agreement to establish a joint innovation center. Tencent Cloud announced that it looks forward to achieving a deep integration of concepts, technologies and scenarios in the field of financial digitalization with Xiamen International Bank. Both parties intend to jointly create cloud computing, data intelligence, blockchain, and distribution.
The HKMA Emphasizes CBDC for Cross-border Trade Settlement
Liu Yingbin, senior assistant president of the Hong Kong Monetary Authority (HKMA) said on November 4th that the HKMA had been closely following the developments of the PBoC’s national digital currency. He said that while on the Mainland such electronic payments would be mainly used for retail payments, Hong Kong’s situation was different and that the Central Bank Digital Currency (CBDC) studied by the HKMA would be mainly used for commercial cross-border payment purposes. In May 2019, the HKMA and the Bank of Thailand initiated Project Inthanon-LionRock to study the application of CBDC to cross-border payments. Meanwhile, Yi Gang, the PBoC’s governor, said the Chinese central bank was open to collaborating with other monetary authorities in establishing a legal framework for adopting and promoting the use of digital fiat currencies.
Huawei’s Latest Smartphone to Ship with Digital Yuan Wallet
In the latest sign that China's national digital currency (DCEP) is likely to be technically ready for launch, Huawei has revealed that its latest Mate 40 line of devices will feature a built-in hardware wallet with hardware-level security, controllable anonymous protection, and dual offline transactions. Huawei has partnered with China's central bank to promote digital yuan pilot innovative applications. Users will be able to use the device as a digital wallet to shop at multiple outlets in the country. They will also be able to initiate transactions when they are offline.
Alipay Launches Joint Savings and Bill Management Service
On November 5th, Alipay launched a new service called “Ant Flower” (蚂蚁合花). Under the service users can invite other Alipay users to participate in Ant Flower and use functions such as joint-savings and bill management. Users can manually transfer funds from their Yu'e Bao account to Ant Flower, or set a fixed time to transfer from a designated account. Consumers can choose Ant Flower to make in-store payments and the app can also be used for online shopping. In addition, under the joint-savings function, parties can set a monthly spending limit through the service.
Ant Group’s IPO is Suspended in Shanghai and Hong Kong
Ant Group’s initial public offering (IPO) in Shanghai and Hong Kong was suspended on November the 3rd, the day after the People's Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) issued new draft rules to regulate the online microloans industry. These new restrictions on microloans include limits on cross-provincial operations, leverage levels, as well as lending amounts for individual borrowers. The China Securities Regulatory Commission (CSRC) said on November 4th that recent regulatory changes could have a “major impact” on Ant’s business structure and profit model. It said suspending the IPO was a responsible move both for investors and markets.
MSCI Adds Lufax to Flagship Index Series
On November 2nd, index provider MSCI announced on its official website that, effective from November 13th, Lufax, the online Internet finance marketplace, will be added to the MSCI Global Standard Index Series and the MSCI China Full Index Series respectively. As a component of the MSCI Global Standard Index, Lufax provides a channel for overseas investors to invest in China, and the company’s inclusion in the MSCI index also marks the increasing recognition of global investors in Chinese companies. The MSCI Global Standard Index, MSCI’s flagship global equity index, began including Chinese A-shares in 2018. Since then the index has been increasing its weighting of Chinese shares, reaching 5% as of November 2019.
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NIFA Announces Fourth Batch of Mobile Financial Apps Filling
Amid growing concerns that the proliferation of mobile apps operated by financial institutions are putting users’ privacy at risk, mobile financial apps must now be filed with the National Internet Finance Association of China (NIFA) (中国互联网金融协会). On October 27th, NIFA announced the fourth batch of mobile financial apps that had been filed and approved. The fourth batch of 61 apps include thirteen banks, two payment institutions, one small loan company, one insurance company, and two consumer finance companies.
Chinese Regulators To Strengthen Supervision Of IT Outsourcing
In order to further regulate the information technology (IT) outsourcing activities of banking and insurance institutions, the China Banking and Insurance Regulatory Commission (CBIRC) recently completed the draft of the “Measures for the Supervision of Information Technology Outsourcing in Banking and Insurance Institutions.” According to the overall requirements, banking and insurance institutions should establish a management system for IT outsourcing activities, to effectively control the risks caused by outsourcing.
China Issues Revised Central Bank Law
On October 23rd China issued a revised law on the central bank to formalize its expanded role in overseeing the financial sector. Under the revised law, the PBOC will strengthen its macro-prudential management and coordinate supervision of systemically important financial institutions and financial holding companies. Under the amended law, regulated institutions can be fined ten times illegal incomes for financial violations. In addition, the revised law confirms that the digital renminbi will have the same legal position and protection under the law as paper notes and coins.
The Shenzhen Stock Exchange Plans To Merge Main, SME Boards
The China Securities Regulatory Commission (CSRC), China’s securities regulator, plans to merge the Shenzhen Stock Exchange’s SME board with its main board in order to streamline trading on the world’s eighth largest bourse. The move is part of the CSRC’s continuous upgrading of the country’s capital markets. Once combined, the SSE would be left with its main board and its Nasdaq-style ChiNext board for tech start-ups. The latter switched to a registration-based initial public offering system earlier in 2020.