China Shifts Policy to Rein in Fintech Lenders and Smaller Banks, Challenging Access to Loans for Small Businesses
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Small businesses in China have benefited from getting loans quickly and easily from fintech firms and smaller banks. Organic farmer Cheng Cunwang sees loans from them as more flexible for his needs than from major state banks.
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However, authorities now aim to scrutinize fintechs more and strengthen regulation of medium and small financial institutions, while making big banks "better and stronger."
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This reversed previous encouragement of small institutions and came as a surprise, per Lian Ping of the China Chief Economists Forum. But some see it as needed given problems at some smaller banks.
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Small companies generate most of China's GDP and jobs but have long lacked affordable financing, though online and smaller banks have helped. Bigger banks are also now pushed to serve them more.
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Cheng still prefers the ease of fintech loans despite their higher rates, though new policies may favor major banks. Analysts say those that differentiate themselves can still thrive.