The unusually high interest rate for Baifa (ordinary financial products usually offer an annual yield of about 4 percent) sparked an investigation by the CSRC.

The commission said on Friday, however, that although Baidu doesn't have a license to sell fund products, the company didn't break any laws.

"Baidu didn't participate in selling the fund. It was only responsible for the network traffic involved in selling the Internet fund product, which is owned by China Asset Management Co Ltd," according to a CSRC representative.

The CSRC representative said that the emergence of Internet financial products is in line with market demand.

"Internet financial products offer convenience for investors. Regulators need to meet the demands of the market and do whatever they can to protect investors' interests," the CSRC representative said.

China's financial sector has only limited competition, said Wu Xiaoqiu, a finance professor at Renmin University of China.

"Internet finance can force the Chinese financial sector to change fundamentally, and that's a very positive trend," said Wu.

Wu suggested that regulations for Internet finance in China should be revised so the sector develops in a sound manner.

Contact the writers at mengjing@chinadaily.com.cn and caixiao@chinadaily.com.cn