China considers forcing tech giants to share financial data
The Chinese government is planning to pressure local tech giants to share some consumer financial data in order to prevent excessive borrowing and fraud, reuters has reported.
Two anonymous sources with knowledge of the matter told Reuters that under these plans, tech giants including Alibaba’s former subsidiary Ant Group, Tencent, and JD.com would be forced to share loan data. This tightening of control over the internet and its biggest players would allow the government to prevent excess borrowing and fraud, the report said.
The People’s Bank of China and other government bodies would instruct these companies to pass their loan data to credit agencies such as the Credit Reference Center and Baihang Credit. These would then share the data with banks and other lenders in order to better evaluate financial risk associated with borrowing.
This could potentially help protect smaller lenders from risk when working with tech giants which wield vast quantities of consumer data. For instance, via its popular payment platform Alipay, Ant Group collects financial data on more than one billion users. Tencent and JD.com control smaller consumer credit businesses, WeBank and JD Digits respectively.
Alex Sirakov, founder of Shanghai-based consultancy AquariusX, said: “China seems to be making the unpopular, albeit right choice to sacrifice the current closed loop mentality financial paradigm in favour of a broader digital identity framework with potentially better access and greater efficiency in the long run.”
The report comes amid increasing scrutiny of China’s powerful tech giants by the Chinese Communist Party. In November, the much-anticipated Ant Group $37bn IPO was scuttled just two days before its stock market debut by the government. The Ant Group has been ordered by the People’s Bank of China to rectify its business, with criticism of its governance mechanisms, compliance to regulations, and micro-lending services.
Since then, Chinese regulators have launched an antitrust investigation into tech colossus Alibaba. Shares in Alibaba fell nearly nine per cent on the Hong Kong stock exchange following the announcement.
Richard McGregor, an East Asia economics expert at the Lowy Institute in Sydney, told AFP that: “There is an underlying political message that no company and no individual can grow so big in China to the point where they can potentially challenge the authority of the [Chinese Communist Party].”
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