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China’s central bank has called for a further “rectification” of the country’s fintech sector, adding more pressure to besieged tech groups by stepping up regulatory oversight.
The latest warning from Beijing, which did not name any company, comes amid mounting headwinds for Chinese tech groups, stock markets and foreign investors in the world’s second-largest economy.
Billionaire Jack Ma’s fintech Ant Group, China’s largest ridesharing app Didi Chuxing and the $ 100 billion tutoring industry have been the target of a snowballing regulatory crackdown that threatens to lead to more technology groups, including Tencent. The Meituan delivery platform and Ma’s e-commerce company Alibaba have been the subject of antitrust investigations.
The People’s Bank of China called on fintech companies to improve competition and consumer rights, as it reported tighter monitoring of illegal cryptocurrency activity while continuing its own efforts to develop a digital renminbi, according to one. press release published on Saturday.
Investors are bracing for prolonged uncertainty. At a high-level meeting chaired by Xi Jinping, Chinese President, authorities on Friday promised tighter controls for Chinese companies selling shares overseas. On the same day, US regulators said China-based groups should disclose more about their structure and contacts with the Beijing government.
Despite signs that the Chinese economy is facing an uneven economic recovery from the coronavirus pandemic, the PBOC has pledged to refrain from ‘flood-like’ stimulus measures as it pledged the stability of the Monetary Policy.
The message from central bankers in Beijing came as an important indicator of the health of China’s manufacturing industry reflecting a worse-than-expected slowdown in July.
The official Chinese purchasing managers index fell to 50.4 last month from 50.9 in June, reflecting rising inflationary pressures, slowing export growth and the effect of extreme flooding in parts from the country.
As the index was above the 50 point marker separating expansion from contraction, July marked the weakest reading since February 2020, when China was hit by sweeping lockdowns.
Goldman Sachs analysts, who had forecast growth of 50.7, noted that China’s new export orders sub-index fell to 47.7 in July from 48.1 the previous month, the lowest since June of last year.
The deceleration in Chinese factory activity follows warnings from Beijing of an unbalanced economic recovery when it announced quarter-on-quarter GDP growth of 1.3% for the three months ending in June.
To complicate China’s outlook, health officials are grappling with a coronavirus outbreak that has spread to Nanjing, the provincial capital of eastern Jiangsu Province, with cases transmitted locally to seven other provinces. China’s National Health Commission said in its latest update that there were 53 new locally transmitted cases.
Additional reporting by Sun Yu in Beijing
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