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Wait-and-See or Whack-a-Mole: What Is the Best Way to Regulate Fintech in China?

Published online by Cambridge University Press:  11 May 2022

Duoqi Xu ,
C. John Taylor  and
Yuanda Ren
Duoqi Xu
Affiliation:
Fudan University, Shanghai
C. John Taylor
Affiliation:
University of New South Wales, Sydney
Yuanda Ren*
Affiliation:
Fudan University, Shanghai
*
*Corresponding author. E-mail: 20110270011@fudan.edu.cn
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Abstract

Chinese fintech, initially taking the form as “Internet finance,” is growing rapidly and poses great challenges to its financial regulatory authorities. Acclaimed as a new financial innovation, Internet finance was once accepted and even welcomed by the normally conservative Chinese financial regulators, who simultaneously adopted a wait-and-see strategy, to encourage such innovation and avoid overwhelming regulation. The benevolent regulation stance, however, bred rampant Ponzi schemes or fake financial innovation, resulting in tremendous monetary losses among lots of investors. To show a quick and active response, the central government popped into a whack-a-mole game, starting a four-year campaign of strict Internet finance regulation that has even cracked down on all the P2P lending platforms. This article analyzes the regulatory policy updates of Chinese Internet finance that is transforming to certain kinds of lawful fintech with difficulties, and that adaptive regulatory-organization restructure, regulatory-system optimization, and regulatory-model innovation would be more effective and constructive regulatory options.

Keywords

Internet financefintechwait-and-see strategywhack-a-mole gamefake financial innovation
Type
Research Article
Information
Asian Journal of Law and Society , Volume 10 , Issue 3 , October 2023 , pp. 433 - 462
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of Asian Journal of Law and Society

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