Internet finance: a rapidly expanding sector in the Chinese economy Internet finance, also known as online finance, is a new financing model that exploits the advantages of the Internet or any other IP network. In China, rapidly growing Internet finance paves the way for revolutionary means of financing other than the capital market or conventional banks. In this article, I will first look at the development of Internet finance in China through the representative of a Chinese company, Alibaba, to explain why this innovation has gained so much popularity. Next, I will analyze some emerging problems and possible solutions. Overall, the rapid growth of Internet finance in China is driven by two main trends. First, the merger of Internet companies into the financial sector. Second, the transformation of financial services from physical to online. As China's largest e-commerce company, Alibaba launched Yu'E Bao in June 2013. Literally translated as "leftover treasure", Yu'E Bao is a fund management platform under Alibaba's Alipay, the largest platform third-party payment provider in China. Yu'E Bao allows Alipay customers to invest their inactive account balances in a money market fund managed by Tianhong Asset Management Co (Jingu 1), which is a typical form of Internet finance. Launched less than a year ago, Alibaba's Yu'E Bao attracted more than 81 million investors as of the end of February 2014, a figure that represents an increase of nearly 20 million users in half the month. In comparison, China's A-share market boasts approximately 67 million investors after 23 years of development (Moran). Alibaba's fund currently has over $40 billion in assets under management, making it the bi...... average of paper eting strategies contributing to this growth. However, its critical problems, such as capital flow restrictions established by banks, lack of inspection of information security and risk control, as well as the unsustainability of high returns, have required increased regulation.Bibliography1. Zhang Moran, “Alibaba Yu'E Bao Online Money Market Fund: 8 Things You Need to Know,” International Business Times, 2014.2. Takeshi Jingu, “Internet finance growing rapidly in China”, Nomura Research Institute, Ltd, 2014.3. “Yu'E Bao's Annualized Return Hits All-Time Low,” China Daily, 4.2014. “Internet finance in China: enemy or enemy-enemy?” The economist.5. “Higher Returns, Similar Risks: Is China's Sweetheart Deal on Internet Finance Real?” Forbes.6. “Chinese banks must evolve or die”, China Daily, 7.2014. “Banks focus on new products”, Wangyi Finance Weekly, 2014.