Chinese regulators have banned companies from making money by issuing new cards in China, saying the practice is “dangerous and illegal.”
The move is the latest step in a decades-long campaign to curb credit card spending by the countrys largest private company, which is accused of using opaque accounting and accounting fraud to siphon off millions of dollars from China’s $20 trillion economy.
According to the Financial Times, the decision comes after several complaints from credit card companies, which said the new card issuance process would make it harder for them to collect on their customers’ debt.
The ban was made possible by a law that was approved last month by China’s central government, which has been battling an economic crisis and a rise in the value of the yuan, the international currency used by China.
The new rules also require companies to report transactions to the government and will require banks to provide data on how many cards have been issued.
It’s not clear how the new rules will affect the new cards issued in China’s cities, where there are already more than 2 million credit cards available.
The Financial Times report also says that a small number of new cards are being issued in the provinces of Hebei and Heilongjiang, which together account for roughly half of Chinas credit card market.
The company behind the new product, Dalian Wanda Group, is also facing mounting regulatory pressure.
The company’s chairman and chief executive, Wang Jianlin, was removed from his post in April, after being found guilty of embezzlement, bribery and money laundering.
The government has launched an investigation into his possible role in the alleged money laundering scheme.