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PBoC struggles to impose personal data regime on China's tech groups

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China’s central bank is struggling to get more than a dozen leading internet groups to comply with a December deadline to share users’ personal information with state-backed credit-scoring companies.

The stand-off over who should control access to the internet groups’ vast troves of data on their users comes as Beijing works to tighten its grip on the country’s tech sector and consumer lending.

President Xi Jinping, who recently secured a third five-year term as head of the Chinese Communist party and military, has been set on reining in China’s private-sector tech companies as part of a larger effort to build a more state-driven economy.

The People’s Bank of China ordered Tencent, Meituan and other large platforms to share user data, ranging from shopping records to travel history, with two state-backed groups, Baihang and Pudao, by early next month, according to people briefed on the negotiations.

Baihang and Pudao would in turn provide a feed of the data to banks for a fee, in order to help them assess potential borrowers’ creditworthiness, but the internet groups are resisting the arrangement, the people said.

Last year, the PBoC moved to ban online platforms from the direct sale of their user data to banks, citing fears about the possible misuse of personal information. But one central bank adviser said the practice had continued because lenders did not want to pay the higher fees charged by Baihang and Pudao.

“Neither platforms nor banks have incentives to follow an order that hurts their business,” said the adviser, who asked not to be identified because of the sensitivity of the matter.

The central bank order applies to internet groups that seek to work with commercial lenders to issue loans to individuals or small businesses.

“Even with a government as powerful as China’s, it never works out that you just have a rule and then magically the rule is just enforced and everyone obeys it,” said Karman Lucero, an expert on data security at Yale Law School. “It takes time for different regulators, institutions and companies to figure out what compliance means and, on top of that complexity, you have people pushing back to slow things down.”

Some platforms have also objected to the fact that one of their rivals, Richard Liu’s, has a 25 per cent stake in Pudao. “There is a lack of trust in Pudao’s neutrality,” said a Shanghai-based executive at one of’s competitors.

Many Chinese banks, especially smaller regional lenders, rely on internet companies’ troves of user data and analytical tools to identify creditworthy borrowers. According to public records, outstanding bank loans issued jointly with online platforms increased 22 per cent last year over 2020, compared with just 12 per cent overall loan growth.

“We are not going to comply until everyone else does,” said an executive at a Shanghai-based lender that works closely with platforms to issue consumer loans.

The lending boom has sparked concerns that platforms’ monetization of client data could undermine personal privacy protections or even threaten national security.

“How do I know who you are selling data to when there is so little oversight?” the central bank adviser said, adding that regulators were now more focused on the security risks of mining consumer data rather than its potential economic benefits.

But a Beijing-based internet executive at one platform argued that his firm has reliable protection measures for personal information and “highly advanced” credit scoring algorithms. “The government wants us to [outsource] a service we can perform well by ourselves,” he said.

Baihang and Pudao are headed by former PBoC officials. “The PBoC wants to have a greater hand in regulating how data is sold and used,” said Lucero. However, a study by Renmin University in Beijing found that internet companies would incur as much as an 8 per cent increase in costs after surrendering data and analysis to the credit scoring groups.

Michael Li, owner of a Shanghai-based business that analyzes credit scores, said: “While the government sees data as a valuable asset that can’t fall into the hands of internet tycoons, officials do not have the capacity to manage the resource efficiently . That means you risk killing the industry.”

Additional reporting by Tom Mitchell in Singapore