Reported Internet finance rules perturb Chinese public(2)

Ren Zhiqiang, president of Hua Yuan Group, a real estate developer, denounced the regulation on his Weibo microblog, saying central bank intervention could be a bad example for the reform effort. No matter how the players compete with one another, the last thing a central bank should do is to tell people how to spend their money. "It's a restriction on market transactions, on economic growth, and even on people's right to decide how to use their assets," he said.

Many are questioning whether the restrictions were genuinely made out of security concerns, as a central bank official claimed, or if the restriction is nothing more than protection of bank profits. Historian Cao Junshu said on his microblog that the news is "shocking". He called such a regulation "absurd", and queried the banks vague mumbling about "protecting capital security".

Alibaba and Tencent claim not to have received any supervisory document from the central bank as yet, and all their services continue to run as normal, but the regulation is still at the stage of soliciting public opinion.

Netizens said caution is one thing, but abrupt denial of Internet finance-related products is quite another. "As the Chinese economy continues to develop, the country needs further, deeper reform: financial reforms should be to the fore in that regard," said the verified Weibo account of Ruidian-Daiweilai, an investment management company based in Hangzhou.

Online peer-to-peer lending, coupled with the boom of Internet finance in general, has been a major impetus for liberalization of interest rates. As an intrinsically cautious institution, the central bank should be "slow" in rolling out any tough measures, Ruidian-Daiweilai said.

Sheng Songcheng, head of surveys and statistics at the central bank said on his Weibo account that huge interbank deposits by funds like Yu'ebao should be subject to reserve requirements. Currently, big banks are required to hand 20 percent of their deposits over to the central bank as reserves. Interbank deposits with negotiable interest rates and early withdrawal options are not subject to these reserve requirements.

Sources at the central bank told Xinhua Friday that the reported regulation is just a draft edition, and more discussions on it need to be conducted for improvement, adding the regulation will not be released in the near future.