Blockchain and fintech are to be mentioned by name in a draft of China’s 14th Five-Year Plan, marking increased focus on these technologies.
Why it matters: The Five-Year Plan is China’s most senior economic planning document. This is the first time for either technology to earn a mention by name.
- But the draft plan also calls for more regulatory scrutiny of fintech.
READ MORE: INSIGHTS | Tech in the Five-Year plan
Details: China’s National Legislature opened its annual meeting in Beijing today. It is expected to approve the draft plan during the week-long session.
- “Drafts are often tweaked during the Lianghui (Two Sessions), but are rarely substantively changed,” Kendra Schaefer, head of tech policy research at Beijing-based strategic advisory firm Trivium told TechNode.
All aboard the China chain: The plan declares blockchain a key technology, along with cloud computing, the Internet of Things, big data, AI, and virtual reality.
- Specifically, the draft plan calls for work on smart contracts, multiple consensus algorithms, asymmetric encryption, and distributed fault tolerance mechanisms.
- Distributed ledger technology is to be applied in fintech, supply chain management, and e-governance, the draft plan said.
- Blockchain emerged as a priority in late 2019, when President Xi Jinping publicly endorsed the technology.
- Just yesterday, a Beijing-based hardware and software solution announced that it will integrate the digital RMB, China’s central bank-backed digital currency. This is the first known domestic application of blockchain to the digital yuan project.
Fintech: The phrase “fintech” (jinrong keji) got three direct mentions; under blockchain development, in a section on regulating tech, and financial reforms. This is the first time a reference by name to fintech has made it in the plan.
- The 13th Five-Year plan made one reference to “internet finance,” and several to fintech-related themes such as “microfinance” and “inclusive finance,” as well as, once, as “internet finance.” Similar language is present in the new draft plan.
- The plan also called for continued R&D in the digital RMB and China’s participation in the creation of global standards for digital currencies.
More rules: The draft plan calls for enhanced antitrust rules and licensing regimes for tech platforms, and the establishment of new regulatory frameworks for fintech, telemedicine, autonomous driving, and smart logistics.
- The plan also called for increased oversight of financial holding companies, a type of corporate structure that is likely (in Chinese) to come to dominate the fintech industry. After months of negotiations with authorities, Ant Group will reportedly reorganize itself as a financial holding company.
- It also calls for strengthening the use of regtech and risk assessments on financial innovation products, including potentially suspending some products.
- Today, China’s legislators also called on commercial banks to increase lending to individuals and small and medium enterprises by 30% in the rest of the year. This will potentially substitute for fintech companies. Facilitating small loans is Ant’s single largest revenue stream.