Easier credit access eyed for gig workers

China is stepping up efforts to improve access to credit for millions of gig workers, with Ding Xiangqun, minister of the National Financial Regulatory Administration, saying the regulator will encourage financial institutions to develop dedicated inclusive financial products for new employment groups, such as truck drivers, ride-hailing drivers, food delivery staff and couriers, to support businesses and stabilize employment.

It is estimated that the number of flexible workers in China has now exceeded 200 million, said Wu Xiuzhang, vice-minister of human resources and social security, in a report to the Standing Committee of the National People's Congress in December. According to a post by the Ministry of Transport on its official WeChat account, as of Oct 31, 2024, a total of 7.48 million ride-hailing driver licenses had been issued nationwide.

The financial needs of truck drivers, ride-hailing drivers, food delivery staff and couriers are typically characterized by small-scale loans, high frequency and urgent demand. Because many of these workers lack formal employment contracts, stable payroll records or collateral such as property and vehicles, their financing needs have long been met by risky lending channels, said Dong Ximiao, chief economist at Merchants Union Consumer Finance and executive director of the Shanghai Institution for Finance and Development.

The NFRA issued a notice in May regarding improving financial services for micro and small enterprises, and encouraging lenders to develop credit products tailored to the financing needs, financial conditions and risk profiles of new employment groups.

Meanwhile, the preparatory group of the self-regulatory committee for online lending under the National Internet Finance Association of China recently introduced a package of initiatives to promote the healthy development of the online lending industry. The measures require preparatory group members — including Du Xiaoman, Ant Group, Tencent, JD Technology and Douyin — to strictly implement the guidelines while encouraging other industry participants to voluntarily adopt similar standards.

The preparatory group called for online lenders to provide support for new urbanites, flexible workers, truck drivers, ride-hailing drivers, food delivery staff, couriers, micro and small enterprises, and individually owned businesses by offering more favorable lending terms.

It also encouraged online lenders, in cooperation with partner financial institutions, to provide relief measures — including suspending debt collection, extending loan maturities, and waiving or reducing interest payments — for borrowers facing major family emergencies or temporary liquidity constraints.

The preparatory group is also studying the feasibility of establishing an industry-wide hardship relief fund jointly financed by internet finance institutions.

Some licensed financial institutions have already embedded financial services into high-frequency digital platforms, including ride-hailing, navigation and lifestyle service apps.

Access to operational data via these platforms helps reduce information asymmetry by allowing financial institutions to better assess the actual repayment capacity of flexible workers. In addition, expanding formal financial services into this market could also help squeeze out illegal and haphazard online lending, Dong said.

He recommended promoting the sharing of de-identified data between digital platforms and financial institutions within a compliance framework, enabling intelligent risk management to shift from post-event response toward earlier intervention.

Dong also suggested that loan limits should be based on borrowers' actual business capacity, with more flexible repayment arrangements to better match the income patterns of these workers. Government-backed guarantees and insurance products could also help mitigate lending risks.

Bank of Communications, a large State-owned commercial lender, is considering offering more tailored financial services for truck drivers, ride-hailing drivers, food delivery staff and couriers, such as small, high-frequency unsecured consumer loans, taking into account various types of data including borrowers' incomes.

The target customer group generally has stable cash flows, frequent financing needs and rapid capital turnover. BOCOM is exploring the use of financial technology to integrate data from the Ministry of Transport, ride-hailing platforms, logistics systems and payment settlement networks, converting indicators such as driving mileage, order volumes and payment records into credit assessment metrics.

jiangxueqing@chinadaily.com.cn