Future of Chinese Fintech Uncertain

China, once a potential contender for global superpower, has lost much of its shine.

The breakneck growth of its economy is deteriorating, bad debt is piling up at record speeds and both domestic and foreign investors are fleeing the country en masse.

China has never been considered a top player in the financial technology sector, but it’s massive consumer market and formerly robust financial sector gave a healthy boost to the country’s fintech industry nonetheless.

But the combination of economic deterioration and the Chinese government’s strict control over all things business is putting pressure on China’s fintech industry.

So far in China’s economic deterioration, close to 1,000 Chinese fintech firms have disappeared, according to data from Bloomberg.

The country’s breakneck growth has brought with it a relaxed attitude to business practices and risks, in some cases.

The fintech industry was no exception, and many fintech firms in China followed a boom and bust cycle.

The timing of China’s economic deterioration also happened to coincide with a massive boom in the fintech industry in 2015.

The end result was hundreds, if not up to a thousand, young fintech firms closing the doors on their operations.

In addition to the economic troubles China faces, the Chinese government is notorious for its control over the country.

A somewhat recent regulation from the government prohibits any new companies from registering with the word “finance” in their name.

The government has also cracked down on crowdfunding and online lending firms with particular severity.

For now, it appears that the Chinese government believes fintech is too young and risky to grow on its own. Instead, it is relegating the growth of fintech to major companies such as Alibaba and Tencent.