No crackdown on Yu’ebao

Yi Gang, vice-governor of the central bank, said the PBOC will closely monitor market conditions to head off risks. Yi warned investors to make careful choices. Ding Xuemei, a spokeswoman for Tian Hong Asset Management, told China Daily that the company welcomes regulatory scrutiny. "With more and more online financial products emerging in the market, it is important to strengthen regulation of the sector. "We've always put risk control and stable development on top of our agenda. Sometimes, we even sacrifice extremely high returns to team up with better and more qualified partners," said Ding.

Ding's comments come amid a decline in the interest rates on many Internet finance products. Yu'ebao was offering a seven-day annualized yield of 5.92 percent on Monday, the first time its annual yield had fallen below 6 percent.

The seven-day annualized return of Tencent Holdings Ltd's Licaitong, an online financial product embedded with the company's mobile messaging app WeChat, was 6.01 percent on Monday, down from its peak of 7.8 percent in late January. Wang Dengfeng, the fund manager of Yu'ebao, said it's only natural that rates for online financial products would decline since the end of the year, when Chinese banks see deposits weaken. "Based on market conditions, it is normal for the annual yield on Yu'ebao to return to about 4 percent," said Wang.

Even with lower returns, online financial products such as Yu'ebao still have some advantages over traditional banks, such as convenience and flexibility, said Wang Weidong, an analyst at iResearch Group, a Beijing-based consulting firm.

"Some banks also launched similar services to allow clients to use money market funds, but it is still easier for people to buy the funds from Yu'ebao or another Internet company because of the streamlined buying process. "Moreover, the purchasing threshold for those online financial products is next to zero," he said. Xinhua contributed to this story.

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