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China summons internet finance firms as clampdown widens

Chinese financial regulators on Thursday summoned 13 internet platforms engaged in financial business, including heavyweights Tencent and ByteDance, to order them to strengthen their regulatory compliance, the central bank said.

The move by the four regulators is part of efforts by authorities to rein in the country’s massive internet “platform economy,” which also includes an ongoing antitrust clampdown.

The companies will have to set up financial holding companies if they meet requirements to do so, as Alibaba‘s

fintech

affiliate Ant Group was recently forced to do, a move that tightens capital requirements.

They should also draft “business rectification” plans to comply with regulations, cut “improper” links between their payment tools and other financial products, break “monopolies” in holding data, and prevent risks in internet mutual aid businesses.

“Tighter supervision is not only aimed at the Ant Group, and the problems of the Ant Group are definitely not an exception. Many platform companies have irregularities to varying degrees behind their rapid expansion over the years,” the state-run China News Service wrote in a Thursday commentary.