China’s central bank wants a say in fintech’s future as it grants new personal credit ratings license to state venture with internet firms

China’s central bank has granted the country’s second license for collecting personal credit ratings to a venture between a state-owned enterprise and two internet firms, in a move that hints at how the government wants a say in how technology interacts with finance and societal risk in the world’s second-largest economy.

Pudao Credit, a 1 billion yuan (US$152.8 million) venture that is 35 per cent owned by Beijing Financial Holdings Group of the municipal government of the Chinese capital city, will be allowed to develop a system to provide personal credit ratings for the banking and financial services industry, according to a statement by the People’s Bank of China. JD Digits, the fintech unit of the e-commerce platform JD.com, will own 25 per cent of Pudao, while smartphone maker Xiaomi will own 17.5 per cent according to an earlier statement.

Personal credit rating firms collect data from financial institutions, and share the data with and provide risk assessment reports to entities that sign up for the service. On top of the financial data, such agencies can also access other data like travel and phone records that are deemed as alternative financial information.

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Beijing-based Pudao would augment the first license granted in 2018 to Baihang Credit, a Shenzhen-based consortium comprising the nation’s fintech association with eight credit rating agencies and technology companies including those controlled by Alibaba Group Holding’s affiliate Ant Group and Tencent Holdings. The shareholding composition of the second license underscores the financial regulators’ increased scrutiny of consumer credit and online loans, especially those granted to small and medium-sized enterprises.