January 6, 2022
Digitalization of China’s financial sector in the new year has been advanced with the latest government guideline and wider promotion of digital currency.
The People’s Bank of China, the country’s central bank, released a development plan on Tuesday for the fintech industry between 2022 and 2025.
Data-driven, smart, people-oriented, low-carbon, fair and inclusive should be the words that best describe China’s fintech industry in the following years, said the plan. By advancing the digital transformation of the entire financial sector, the fintech industry should strive to better facilitate China’s high-quality development, it added.
Under prudent regulation, the fintech industry should have its data management capabilities strengthened to enhance the quality and efficiency of financial services. An advanced computing system with higher performance should be established to consolidate the groundwork for financial innovation.
Digital technologies should be more widely applied in the financial sector while a smart risk control system should be set up to nurture a safe and efficient fintech innovation system, according to the plan.
Andrew Huang, partner and fintech leader of global professional services provider KPMG in China, said that the fintech industry has thrived in China over the past few years with the appearance of new business models and application scenarios. Lowering costs and improving efficiency in the traditional financial sector based on technological breakthroughs will form a major part of the development path for fintech companies. Data security is another major issue that the fintech industry should address, he said.
Also launched on Tuesday was the digital renminbi app on the Apple app store and Android market. Downloading of the digital renminbi app is now accessible in 10 Chinese cities including Shenzhen, Chengdu and Shanghai, as well as the venues of the Beijing 2022 Winter Olympics.
There are nine designated operating institutions for the app at present, including Bank of China, the Alibaba-supported MYbank and Tencent-backed WeBank. Users can make password-free payments via the digital renminbi app at the e-commerce platform JD, third-party service provider Meituan and online travel agency Trip.com.
While trials of the digital renminbi started in April 2020, users had to be approved in advance to get a code and the installation packages for downloading the application, and the process was relatively lengthy and complicated.
According to Mu Changchun, head of the central bank’s Digital Currency Research Institute, more than 140 million personal digital wallets for digital renminbi had been created and another 10 million corporate digital wallets had been opened as of Oct 22.More than 150 million transactions have been made via digital wallets, with the total transaction value approaching 62 billion yuan ($9.7 billion).
Following a 4.66 percent surge on Tuesday, A-share digital yuan related companies slid slightly by 0.34 percent on Wednesday, while the bench mark Shanghai Composite Index fell by 1.02 percent.