China cracks down on illegal online financial information accounts to ensure market stability
Published: Aug 29, 2021 07:48 PM
Concept photo of internet finance Illustration: VCG

Concept photo of internet finance Illustration: VCG

China is intensifying a crackdown campaign on problematic online social media accounts that illegally publish financial information and engage in fraud and other illegal activities, as authorities in Shenzhen arrested a popular financial blogger, known as Huang Sheng, on suspicion of operating an illegal peer-to-peer (P2P) lending platform.

The scrubbing and removal of illegal financial media accounts, as part of the normalized supervision of the capital market, is crucial to maintaining a stable financial market and defusing financial risks, a top priority for Chinese regulators, experts said.

In the latest high-profile case, Huang, a shareholder of online P2P lending platform Xitouwang, was arrested by the police on August 18, after the platform was suspected of illegally taking public deposits, the Futian branch of the Shenzhen Public Security Bureau said in an announcement on Saturday. Xitouwang owes 662 million yuan ($102.3 million) to 5,635 people.

Huang has been known to the public as a top financial blogger in China, with more than 3 million followers on his Sina Weibo account "Huang Sheng Studies Finance." He also has more than 2 million followers on his WeChat account and 1.41 million followers on short-video platform Douyin. 

As of Sunday, "Huang Sheng Studies Finance" could no longer be found on Weibo, and his WeChat account had also been suspended.

This is a timely move to tackle the illegal activities undertaken by some financial "self-media" accounts, internet sector analyst Liu Dingding told the Global Times on Sunday, adding that this kind of regulation could be the new normal.

"It shows that internet governance in China has entered a new stage, and the laws and governance are in place and basically synchronized with China's development path. Whenever problems occur in an industry, the authorities will soon target it," Liu said.

Leading Chinese social media platforms WeChat, Douyin, Kuaishou and Sina Weibo said on Saturday that they would start rectification of irregular practices involving the publication of financial information on their platforms, in response to the top Chinese cyberspace regulator's new campaign to crack down on illegal activities at online financial information platforms.

According to a statement issued by WeChat on Saturday, in line with the requirements of the Cyberspace Administration of China (CAC) to create a "clean" internet environment, WeChat will immediately close financial self-media accounts that are found to illegally spreading false financial information, blackmailing others or spreading rumors that lead to strong public anger. The rectification process will last until October 26.

Douyin, Kuaishou and Sina Weibo announced similar measures starting from Saturday, targeting financial self-media accounts' violations like publishing unconfirmed business information, distorting economic policy, and spreading rumors and blackmailing others.

Sina Weibo said that it would severely punish those accounts that violate relevant rules and keep the public updated on the process in a timely manner, as it will actively guide the construction of a sound and orderly internet environment.

The four platforms' announcements came after the CAC said on Friday that it will rectify irregularities in financial self-media accounts.

The move shows the continuous improvement in the regulatory framework when it comes to irregular practices by financial self-media accounts, Dong Dengxin, director of the Finance and Securities Institute of Wuhan University, told the Global Times on Saturday.

The China Securities Regulatory Commission has occasionally issued alerts warning investors of illegal securities activities publicized by some financial self-media accounts, which could pose extremely high risks.

By comparison, the CAC apparently has greater enforcement power over financial self-media accounts that are used to spreading fear without restraint to get clicks and views, Dong noted.

The development of the social media platforms has blurred the line between grassroots observers and experts, but the blind pursuit of online traffic must be curbed when it comes to publishing and interpreting financial news, because investor sentiment is an important factor affecting market performance, Dong said.

For instance, Chinese regulators have introduced measures to crack down on monopolistic behavior and unfair competition throughout the internet sector. The purpose is to tackle problematic issues in some internet giants, such as monopolistic behavior and cybersecurity risks, laying the foundation for high-quality development.

However, some self-media accounts misinterpreted the trend and spread pessimistic views to get attention, causing a negative impact on investor sentiment and weighing on the stock market.

Under the regulatory requirements, self-media accounts that distort China's financial policies and macroeconomic data, badmouth the domestic financial market and economy, spread rumors and "inside information," maliciously hype speculation in the stock and housing markets, and publish financial columns pretending to be government insiders or scholars will be punished.

The latest crackdown on irregular financial media accounts is part of a campaign by the Chinese cyberspace regulator to maintain a clean internet environment so as to address major issues of public concern related to the online sector. 

The campaign also covers illegal activities in the cultural and entertainment sectors, with enhanced rectification measures released targeting the unhealthy parts of "fan circle" culture.