China is undeniably the world leader in fintech, hosting some of the most innovative and successful companies in the sector, including Alibaba’s Ant Financial worth a whopping US$150 billion and Lufax, China’s largest online wealth management platform worth an estimated US$60 billion.
The success of China’s fintech industry can be attributed to the government’s efforts to cultivate the country’s knowledge economy. Cities such as Beijing, Shanghai, Guangzhou, and Shenzhen have attracted and retained talent in the financial services and technology sectors and now, unsurprisingly, house some of the country’s biggest fintech companies.
Guangdong, a tech center
Guangdong has been a hotbed for tech innovation, supported by the city’s large pool of tech talents, and local authorities’ willingness to adopt digital solutions.
Guangdong is home to nearly 70% of the universities and high-tech talents, 97% of the state-level key disciplines and all state-level key labs of the Guangdong province, providing the city with all the needed innovative resources.
In recent years, Guangdong has followed the national strategy of innovation-driven growth to facilitate the cooperation between research and industries, and is now looking to become a state-level innovative city and international high-tech innovation hub.
Among the most notable initiatives undertaken by public authorities, the WeChat digital identity pilot program announced in December 2017 is arguably one of the most noteworthy. The program began late last year to allow participants from Guangzhou’s Nansha district to use their WeChat identity in place of a government-issued ID for use for online and offline government services and other areas requiring authentication such as hotel registration and ticketing.
The goal was to eventually cover to whole of Guangzhou, before expanding the platform to other regions of the country throughout 2018.
Fintech in Guangzhou
Guangzhou’s advanced technology industry and the city’s developed financial center have made it a fertile ground for fintech companies and innovation.
According to Qiu Yitong, director of the Guangzhou Finance Bureau, Guangzhou has been at the forefront of commercial innovation and foreign trade for centuries, and today, there is no city better placed than Guangzhou to become the world’s leading fintech center.
In recent years, finance in Guangzhou has adhered to the path of reform and innovation. The city has launched four national financial reform and innovation pilots, including the PRD Financial Reform and Innovation Pilot, and the Guangzhou Green Finance Reform and Innovation Pilot. This makes Guangzhou the Chinese city with the greatest number of regional financial reform and innovation pilots.
Currently, Guangzhou is building a high-tech financial service system that includes a high-tech investment platform, lending platform and capital market financing platform. It started a lending risk compensation fund pool with an initial investment of 400 million CNY to support technology SMEs.
Among the initiatives being undertaken and areas of focus, Yitong cited:
Fintech hubs and regulatory sandbox: the city is looking to create special fintech support policies and development plans, build finance and tech focused hubs, and improve systems to attract large financial institutions to set up fintech innovation centers in Guangzhou and test out the regulatory sandbox.
Supply-chain finance innovation
Cross-border finance innovation
Green finance innovation: Guangzhou has received approval from the State Council of the People’s Republic of China to build pilot zones for green finance innovation. Guangzhou is currently the only green finance pilot zone in the four ‘first-tier’ cities in China – Beijing, Shanghai, Shenzhen and Guangzhou.
Finance innovation in the Guangdong–Hong Kong–Macao Greater Bay Area: strengthening financial exchanges and enabling cooperation in the area of fintech innovation between Guangzhou, Hong Kong and Macao.
Belt and Road Initiative (BRI) finance innovation: BRI is a development strategy proposed by the Chinese government that focuses on connectivity and cooperation between Eurasian countries, primarily China, the land-based Silk Road Economic Belt (SREB) and the ocean-going Maritime Silk Road (MSR). Guangzhou has committed to introduce funds from countries and regions along the route to participate in setting up an industrial investment fund across its districts. Guangzhou will also explore the establishment of a cross-border financial assets trading platform through private equity to carry out the issuance and transfer transactions of financial securities products such as stocks, funds and bonds in Hong Kong, Macao and the countries along the Maritime Silk Road.
Featured image: Guangzhou, Wikipedia.
