On Systematic Construction of Legal Framework for Responsible Lending in China

In the context of the post-financial crisis era and the global movement for financial consumer protection, many countries and regions have established legal frameworks under the guidance of the responsible lending concept to ensure its implementation. In China, the practice of responsible lending faces several challenges, including pressures of macroeconomic credit policies, impact of internet-based lending, and inadequacies of the current credit regulatory legal system. Article 74 of the Law of the People’s Republic of China on Commercial Banks (Draft Amendment) addresses the implementation of responsible lending by commercial banks in response to these realities. However, this provision merely articulates the concept of responsible lending without advancing into the realm of concrete institutional construction. To control financial credit risks and protect the legitimate rights and interests of credit consumers, China urgently needs to intensify regulatory intervention in financial credit. This includes establishing an image of the borrower as a limited rational actor, imposing suitability obligations on lenders, regulating credit products, setting reasonable standards for interest rates, enhancing regulation of credit marketing practices, improving relief mechanisms for borrowers, and ultimately establishing a systematic and effective legal regime for responsible lending.