Alipay, Jingdong Finance and other Internet bank deposit platforms were all shut down without warning on the 27th. Chinese banks will take over nearly two trillion yuan of deposits from the above platforms to address the lack of liquidity in the banking system.
On January 15, the CBRC, together with the People’s Bank of China, issued a Notice requiring commercial banks to land Internet deposits. on the evening of the 25th, several Internet platforms, including Alipay, Jingdong Finance, Drip Finance, and Tianxing Finance, closed their entrances for the purchase of bank deposit products.
Huang Xiaomin, a rights activist in Chengdu who is concerned about the direction of China’s Internet financial market, said in an interview with this station this Thursday (28th) that China’s financial regulators are increasing their intervention in the financial market to prevent financial risks: “At the end of the year, around the Spring Festival it should be encouraging consumption, stimulating consumption, increasing consumption, and due to factors such as the Epidemic, all the more reason to do everything possible to increase the nation’s consumer confidence, but the Internet finance was shut down, may be the current mainland government on the financial may exist a crisis, a pre-control, prevention.”
Internet all deposit products offline
According to the Jingdong Financial App customer service, offline old users to buy selected products, has held the product is not affected, natural settlement after maturity, the relevant deposits are protected by law. The customer service of Dou Xiaoman Finance said that the platform was fully offline deposit products at 20:00 on January 25, if users need to buy deposit products, they can go to the bank to check.
As of now, internet platforms such as Alipay, Jingdong Finance, DDT Finance and Tianxing Finance have been closed. Deposit customers can only contact the relevant banks for follow-up services.
Banking system liquidity is getting worse every day
Sun Dali, a finance scholar at Hebei University, said in an interview with the station that the authorities’ order to shut down Internet financial platforms, amid the withdrawal of foreign capital from China and the yearly decline of residents’ bank savings, indicates that liquidity is getting worse and worse, and that financial regulators are trying to improve the situation: “Banks are actually already under great pressure to survive, and one of the biggest sources of funds is savings. Without a certain amount of savings, their lending volume cannot rise, but with a rise in savings absorption, social capital flows will shrink.”
Sun Dali said the average number of savings of Chinese residents is just over 50,000 yuan, which is lower than the average country: “After the emergence of Internet financial platforms, the Chinese Communist Party has been arguing that the amount of private savings is huge, that Chinese people like to deposit money, and that it is necessary to turn this huge amount of savings into liquidity between markets in order to cut the leeks. But in fact, the amount of savings in China has fallen sharply since 2004.”
Local banks with insufficient liquidity are the biggest beneficiaries
Last year, a research report by Zhongtai Securities’ Dai Zhifeng team showed that Internet deposits were expected to be on the scale of $1 trillion to $2 trillion. In response, scholar Sun Dali said nearly two trillion yuan of deposits will flow into local banks and become part of residents’ savings.
On January 15, the General Office of the China Banking and Insurance Regulatory Commission and other departments issued a notice on matters related to regulating commercial banks’ personal deposit business through the Internet, saying that commercial banks are not allowed to carry out Time deposit and fixed-income deposit business through non-self-operated network platforms.
Subsequently, banks such as Pudong Development Bank, Shandong Lanhai Bank and Anhui Xin’an Bank issued announcements to adjust the service content of personal deposit products carried out on non-self-operated platforms and transfer personal deposit business to self-operated platforms.
Since Ant Group took the lead in closing the entrance to purchase bank deposit products on Alipay platform last year, other internet platforms have followed suit and closed the entrance for new users one after another. But old users can still add subscriptions to the bank deposit products they have purchased, and now even this “back door” has been closed.
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