HONG KONG -- China will support only those financial technology businesses that benefit the real economy, a top regulator says, as the government becomes more cautious about the financial risks encouraged by the fast-growing sector.
In a speech at the Asian Financial Forum on Monday, Jiang Yang, vice chairman of the China Securities Regulatory Commission, said the development of fintech should support the wider economy, instead of profiting only "a small group of people."
Jiang's remarks echoed Chinese authorities' increasing unease about the ever-changing industry, as regulators step up efforts to stabilize the financial system.
The People's Bank of China last September outlawed initial coin offerings, a means of crowdfunding using cryptocurrency, followed by a halt of virtual currency trading on domestic exchanges. The fast-growing and loosely regulated online person-to-person lending platforms and underground fundraising activities also unsettle financial regulators.
China accounted for half of the world's digital payments and three-quarters of the global online P2P lending volume in 2017, according to accounting firm PricewaterhouseCoopers.
"From a perspective of providing convenience to people's daily life, fintech will lead the way to a better future. As regulator, we support the development of fintech, but we also should not ignore the risks," Jiang said during a panel discussion.
He said the spread of fintech might increase the risks of mechanical failures that are out of human control, such as the "flash crash" of New York Stock Exchange in 2010, which saw the Dow Jones Industrial Average drop almost 1,000 points in just 20 minutes.
Jiang also worried that the easy accessibility of fintech could provide a breeding ground for financial crimes, and the use of big data technology might make people overlook some important issues.
Despite his concerns, Jiang emphasized that the securities commission has an "open mind" toward the industry -- as long as it benefits the real economy.
"Support is not enough; we need to provide some guidance," he said. "If the companies only benefit a small group of people and their own products, they are not being responsible for the society, the economy and the investors.
"We need to set regulations first -- what they can do and what they can't do -- so the market has a very clear expectation."