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The Chinese government seeks to regulate the financial operations of fintech companies as a means of establishing order and stability in markets.
Chinese authorities ordered on Monday that the financial technology company Ant Group scale back its operations as part of an investigation into e-commerce giant Alibaba group. The move comes amidst a wider strategy to regulate Internet companies in the country.
During an interview, the deputy governor of China’s central bank Pan Gongsheng said that "the company's governance mechanism is not sound; the legal awareness is indifferent, the regulatory compliance requirements are defined and there is illegal regulatory arbitrage behavior."
Moreover, the official pointed out that the company's governance "damages the legitimate rights and interests of consumers and triggers consumer complaints."
The decision comes after the Chinese government launched on December 24 an anti-trust investigation into the Alibaba Group, China's largest technology company. As a result, the stock of the online trading enterprise lost more than 8 percent on the Hong Kong Stock Exchange.
On December 27, the official news outlet for the Chinese central bank, PBOC's Financial News, explained in an article that "there is no preformed experience to which we can refer when regulating the complex financial operations of Internet companies."
In this sense, the decision, "for China, including qualified internet companies within the purview of financial holding regulation, embodies the concepts of health and high-quality development, and will help to create a standardized and excellent market order," the media outlet emphasized.