China Issues Guidelines on Development of Internet Finance
06 August 2015
The People's Bank of China, Ministry of Industry and Information Technology, Ministry of Public Security, Ministry of Finance, State Administration for Industry and Commerce, State Council Legislative Affairs Office, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission, and State Internet Information Office jointly issued the Guiding Opinions on Promoting the Healthy Development of Internet Finance not long ago to encourage financial innovation, promote the healthy development of Internet finance, clarify the regulatory responsibilities, and regulate market order.
The policies proposed in the Guiding Opinions (Yin Fa  No. 221) include:
First, actively encourage innovation in Internet finance platforms, products and services to stimulate market vitality. Qualified financial institutions should be encouraged to build innovative Internet platforms for online banking and online security, insurance, fund product sales, and consumer finance. Internet companies should be given support in establishing Internet payment institutions, online lending platforms, crowdfunding platforms and online financial product sales platforms in accordance with law and regulations. E-commerce companies should be encouraged to build and improve their own online financial service system and effectively expand their e-commerce supply chain business in accordance with financial laws and regulations. Market players should be encouraged to actively unfold product, service, technology and management innovation to increase their core competitiveness.
Second, encourage market players to cooperate with one another and complement one another with their strong points. Financial institutions, small and micro financial service firms and Internet companies should be given support in business cooperation and making business innovations in order to establish a good environment and industry chain for Internet finance.
Third, widen the financing channel for market players and improve the financing environment. Social capital should be given support in launching Internet finance investment funds. Outstanding market players that meet the requirements should be encouraged to get listed and raise funds on the main board, growth enterprise board and other domestic capital markets. Banking financial institutions should be encouraged to give support to market players in the startup stage in accordance with financial policies for supporting the development of small and micro enterprises.
Fourth, relevant government departments must persist in streamlining administration and delegating power to the lower levels, provide quality service, and create a good institutional environment favourable to the development of Internet finance. Provincial people's governments are encouraged to increase policy support to Internet finance.
Fifth, implement and improve the relevant fiscal and taxation policies. Market players with a relatively small operation and in the startup stage that meet China's existing tax policy requirements for small and medium-sized enterprises, especially small and micro enterprises, are entitled to preferential tax policies in accordance with regulations. Overall plans should be made to improve the tax policies for Internet finance in conjunction with the VAT for business tax reform in the financial industry. The policy of pre-tax deduction for the R&D expenses of market players for new technologies and new products should be implemented.
Sixth, promote the building of credit infrastructure and cultivate the system of supporting services for Internet finance. Market players are encouraged to establish credit information sharing platforms. Qualified market players are encouraged to apply for credit-checking business permits, promote market-oriented credit checking service, and increase information transparency. Accounting, auditing, legal, consultancy and other intermediaries are encouraged to provide professional services to Internet companies.