China signals the end of tech clampdown with hefty fines on Ant Group and Tencent

The Chinese government has highlighted its shift in focus from the aggressive regulatory crackdown on the tech industry to what it terms “business-as-usual supervision”. Even so, it has imposed hefty fines on Ant Group and Tencent. Notably, the two companies enjoy a duopoly in China’s digital payments space.

China’s tech clampdown

Tencent, as well as its payments subsidiary - Tenpay, has been fined about $410 million (2.99 billion yuan) by the People’s Bank of China (PBOC). In a filing released on Friday, the fintech company indicated that the central bank linked the fine to “its past regulatory breaches in relation to the provision of payment services in the mainland of China”.

At the same time, PBOC has fined Ant Group, an affiliate of Alibaba with a fine of about $1 billion (7.123 billion yuan). It accuses the fintech company of an array of illegal activities related to consumer protection, anti-money laundering practices, corporate governance, payments, and settlement, fund sales, as well as banking and insurance.

In recent years, the Chinese government has been reining in the country’s aggressive expansion of its tech sector. In particular, it has subjected the involved entities to intense regulatory scrutiny.

For instance, toward the end of 2020, China’s administration canceled Ant Group’s IPO (initial public offering). Interestingly, that would have been the largest IPO on record as at the time. Subsequently, the company has had to make certain major restructures that have impacted its influence on consumer finance. Additionally, Jack Ma has allegedly taken a step back in the running of this fintech giant while its main offerings have been subjected to regulations.

Amid all this scrutiny, the country’s central bank has signaled that the clampdown may soon come to an end. In a statement, it stated, “Currently, most of the prominent problems in the financial business of platform enterprises have been corrected. The focus of the financial regulators has shifted from collectively rectifying the fintech businesses of tech platforms to business-as-usual supervision. ”