A consumer scans an Alipay QR code to pay for the order at a self-service restaurant in Hangzhou, Zhejiang province. (Photo: Xinhua)
Editor's note: At its 2020 work conference, the central bank called for continuous efforts to rectify financial risks online.
Beijing Youth Daily comments:
The development of internet finance in recent years shows that financial technology is a double-edged sword. It does make payments a breeze, but it also greatly increases financial risks, posing a huge challenge to the country's financial security.
With the emergence of new fintech services, China must ensure that financial institutions fulfill their main obligation, to serve the real economy, and guard against becoming an exclusive channel to fund the virtual economy.
Preventing or removing major financial risks remains China's priority in its quest to build a moderately prosperous society in an all-round way. Over the past year, China made key progress in this regard, effectively curbing the macro leverage ratio, dealing with the threat of shadow banking, and reducing internet finance risks.
While internet finance has made payment much more convenient and social operation more efficient, its rapid growth has given rise to some problems, not least because some institutions lack legal and risk awareness and are not adept at protecting consumers' rights. The fact that some related industries lag behind in the field of innovation has also created certain problems. There have been frequent cases of illegal fund-raising, pyramid selling and other frauds under the guise of financial innovation. In the absence of strong regulation over internet finance, loan sharks have targeted students, sometimes even endangering their lives.
The authorities must tighten supervision on internet finance and prevent illegal financial activities online. In other words, internet finance should not be "beaten to death" just because it involves risks, and innovation should not give rise to swindling.