BEIJING, (Xinhua) -- Each morning when he wakes up, Yang Qingfeng opens an app on his mobile phone to check his earnings from Yu'ebao, China's most popular money market fund.
But the 29-year-old IT worker in Beijing never expected that Internet finance would be mentioned in the government work report, a State of the Union-style speech delivered by Chinese Premier Li Keqiang.
While addressing the opening ceremony of the National People's Congress,China's top legislature, on Wednesday, Li said the government will promote the healthy development of Internet finance.
Internet finance products have become big hits among Chinese people, but they have also received backlash from some experts and bank officials.
Since being launched by Chinese e-commerce giant Alibaba last June, Yu'ebao has attracted more than 81 million users with aggregate deposits at nearly 500 billion yuan (81 U.S. dollars). The sum is bigger than the total value of all other money market funds in China.
The instant success has lured many other major Internet companies such as Tencent, Baidu and Netease into the business.
Unlike most wealth management products sold at banks, Internet finance products do not have investment thresholds. Meanwhile, traditional banks offer a 0.35 percent demand deposit rate and a 3.3 percent one-year deposit rate, while Internet finance products offer an annualized yield of about 6 percent.
The much higher rates have prompted many Chinese depositors to pull money from traditional banks and move it to web-based money market funds.
Most money in the money market funds is invested in interbank deposits, which offer higher earnings than those for retail deposits, eating into the profit margins of banks. Many experts and bank officials lashed out by saying they could push up financing costs and therefore hurt corporate earnings and economic growth.
Some other Internet finance products, including peer-to-peer lending, also reported explosive growth as people sought higher earnings despite potential bigger risks.
Commercial banks have felt the pressure. The state-backed "Big Four" launched a host of products similar to Yu'ebao, trying hard to retain prospective depositors.
Pan Gongsheng, a vice governor of the People's Bank of China, China's central bank, said Internet finance could add more investment channels, reduce finance trading costs and push forward interest rate liberalization.
Pan, also a member of the national committee of the Chinese People's Political Consultative Conference (CPPCC), said the central bank would support innovation while strengthening supervision and regulation.
Internet finance triggered a big debate ahead of the two sessions of the top legislature and political advisory body, which kicked off this week.
A commentator from China Central Television, the state broadcaster, blasted Yu'ebao as "a bloodsucker bending over the bodies of banks" and advised authorities to ban them.
The inflated promise of high earnings by some money market funds and closures of dozens of peer-to-peer lending websites have also triggered concerns about their risks.
"I believe there is a big risk in Internet finance and the risk can be disastrous," said Li Yanhong, chairman of China's largest search engine, Baidu. Li is also a member of the CPPCC's national committee.
"I support the government beefing up supervision and regulation over Internet finance products to guard against risks," Li said.
Wang Jingwu, governor of the Guangzhou branch of the central bank, said authorities should attach equal importance to supporting innovation and risk prevention.
Innovation in Internet finance and its healthy development could help provide various Internet finance products and meet the public's demand for financial services, Wang said.
Pan even said Internet finance would do good to the real economy.
"Internet finance is conducive to expanding financing supply and developing mini-finance. We are open-minded and very much support it," said Pan.
In the government work report, Premier Li also pledged to vigorously develop finance in a bid to trickle funds into mini- and small businesses and agricultural-related projects.
Mei Xingbao, a member of the CPPCC's national committee, said it isn't easy for regulators to make Internet finance serve the real economy rather than just getting higher returns from interbank deposits.
"We can get Internet finance products to support environmental protection and new-energy vehicle projects," said Mei, an outsider supervisor of the stated-owned Bank of China.
"Of course, the costs will be much higher, but the authorities can offer them some subsidies," said Mei.