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Internet can foster cross-Straits relations

By SUN LI (China Daily) Updated: 2015-05-26 09:47

Online finance that offers innovative products and services is a crucial sector for enhancing cross-Straits financial cooperation, and mainland industry players could learn from their Taiwan counterparts in terms of making regulations to control risks.

From booking hotel rooms on applications to managing personal finances on smartphones, Internet finance has contributed to a digital financial environment that has caught the attention of investors across the Straits, said Wang Zhiguo, president of the China Association for the Promotion of Industrial Economics.

Compared with the situation of Internet finance in Taiwan, the Chinese mainland lags behind in such aspects as technology and structuring a sound and effective framework, Wang said.

The major problem in Internet finance is inadequate risk and evaluation systems. The sector is also hampered by illegal network transactions that can be difficult to detect, gaps in information technology security and an incomplete regulatory system.

"The market entry threshold of Internet financial products in the Chinese mainland is relatively low. Even those big-name, listed e-commerce companies may have counterfeit products and to make it worse, they will not get punished for that," Wang said.

As Taiwan plays a leading global role in regulating Internet finance, mainland companies should boost exchanges with their Taiwan-based peers, he said.

Companies in Fujian province, which boasts proximity to Taiwan and a free trade zone that focuses on cross-Straits cooperation, will play a pioneering role in cooperating with Taiwan companies on some Internet finance programs, Wang said.

Internet finance, which involves such services as peer-to-peer online lending, crowdfunding, online wealth management products and virtual currencies, signals a trend of digitalized financial services.

Both banking and non-banking financial services providers should follow these trends, said Hsu Chen-min, a National Taiwan University economics professor.

Cross-Straits Internet financial cooperation could focus on P2P online lending, third-party payments and mobile payments, Hsu said.

In terms of cooperation on P2P online lending, a P2P loan joint venture between the Chinese mainland and Taiwan could be set up, which could draw on Taiwan's experience in building a credit rating system and the credit reference center of the People's Bank of China, Hsu said.

"Cross-Straits Internet finance industry players may also collaborate with a company in a different sector, say, a P2P lending company aligned with an insurance company and let the insurance company underwrite the loan," Hsu said.

The development of Internet finance is expected to accelerate by realizing integration and interaction with traditional financial institutions, and cross-Straits Internet finance companies should combine the advantages of third-party payments and traditional financing to create more innovative financial services, Hsu said.

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