Yu’ebao asserts ‘effective regulation’

Alipay reaffirmed Tuesday that its monetary fund Yu'ebao, which it co-launched with Beijing-based Tianhong Asset Management Co, is "always under effective regulation" after heavyweight regulators spoke out about the burgeoning product and about regulating the Internet finance sector.

Analysts said earlier comments by the authorities about possibly stepping in to regulate the fledging Internet finance sector had touched the nerves of many as China's lawmakers gather in Beijing to discuss the country's social and economic policies.

"China will not crack down on Internet finance, but will improve regulations in the area," Zhou Xiaochuan, governor of the People's Bank of China, the country's central bank, said Tuesday on the sidelines of the ongoing sessions of the national legislative and consultative bodies.

"Yu'ebao never lacks supervision and regulation as it has always been effectively supervised and regulated by government bodies including the People's Bank of China, the China Securities Regulatory Commission, and the National Audit Office," Chen Liang, spokesman for Alipay, e-commerce giant Alibaba Group's online payment service, said in an e-mail sent to the Global Times on Tuesday.

Chen said the company interacted with regulatory bodies 43 times during the 264 days after its creation in June 2013, with 19 visits from regulatory bodies since beginning of 2014.

The interactions included submitting documents and receiving onsite inspections, Chen said.

Linking the lack of regulation in the Internet finance sector to Yu'ebao's lack of regulation is inappropriate, the company said in the statement.

Yi Gang, vice governor of the central bank, said on Tuesday the central bank will closely watch market changes and take "appropriate measures" to prevent possible risks arising from the sector.

Yi also warned investors to be more cautious in their choices..

Allowing its users to invest their money into money market funds with high returns and almost zero threshold, Yu'ebao has become China's largest single fund product with 81 million users by February 26, according to Tianhong.

The aggregate deposits of Yu'ebao were estimated to be about 410 billion yuan ($66.7 billion) by the end of February.