Personal Note: China’s economy seems to be booming, one reason was the rise of P2P lending practice, the free flow of money from people to people, hands to hands, without much governmental regulations. Right now a friend’s mother has lost tons of money because she trusted one of her former students with her money to purchase an apartment…difficult to find or recover the money now! My friend is trying but there is no legal recourse because there is no legal process involved…all done with trust in people, in friends, in people you trusted! P2P or peer to peer exchange of cash, when it started, was the best thing to happen in China…helping many people to start companies and businesses! Then…like everything else in life…people are selfish and greedy and exploitative…taking advantage of the weakness of the underground institution without regulations! So, you lose your money without any way to recover it! Peace, steve, usa jan 29, 2020 email@example.com blog – https://getting2knowyou-china.com
A 71-year-old victim’s tale reveals extent of greed in China’s US$30 billion peer-to-peer lending fiasco
• About 6,000 peer-to-peer lending companies have defaulted on payments, absconded with cash or gone out of business as of the end of September
• China has lately taken harsher measures to tackle the P2P industry that is rife with fraud and mismanagement
Daniel Ren in Shanghai
, 30 Dec, 2019 scmp hong kong
The collapse of China’s peer-to-peer platforms, once touted as a model to reshape the nation’s financial landscape, has left millions of victims in financial ruin and despair.
Among them is Bao Jiaqi, a former state glassware company worker in Shanghai who deposited 300,000 yuan (US$42,900) in 2016 with a platform managed by Xinming Finance.
The 71-year-old retiree has spent the last two years chasing the now-defunct company and its executives for her money back, in vain, after the online lender went bust in 2017. More than 400 other victims have lost a combined 1.2 billion yuan in the blow-up, she said.
“It is a painful experience for most of us,” said Bao, admitting some guilt for being enticed by the juicy returns. “A business model that received the government support has eventually caused the little guys like us a huge bill.”
Nobody from Xinming could be reached for comment.
Tales of greed have emerged as the common thread in China’s explosive growth in internet-based lending. The business coexists alongside other under-regulated wealth products that lurk in the shadow of its banking ecosystem.
P2P: China’s once-booming lending industry must close within two years, government notice says
28 Nov 2019
About 6,000 P2P lending companies have defaulted on payments, absconded with cash or quit operations as of the end of September this year, according to industry data provider Wangdaizhijia. In total, the equivalent of US$30.6 billion from 2.7 million customers may have been trapped in the failed platforms.
The sector has been receiving harsher policing in recent months, as policy makers seek to control risks in the face of an economic slowdown. Under a Beijing plan announced in early November, most of the nation’s P2P lending operators would be closed down, while a select few with strong capital would be turned into consumer lenders.
China’s Hebei, Hunan provinces impose total ban on P2P platforms
This quarter alone, the provinces of Hunan and Hebei have outlawed peer-to-peer lending platforms in their attempts to rid the industry of frauds and mismanagement.
P2P platforms mushroomed at the height of financial markets deregulation from 2012. They collect funds from private investors with promises of high returns, and lend them to individuals and small companies that typically have trouble borrowing from traditional banks.
The State Council, China’s cabinet under the leadership of Premier Li Keqiang, had been calling for “mass entrepreneurship and innovation” to sustain the nation’s economic boom. P2P lending platforms are seen as an efficient way to help grease business at a grass-root level.
However, thousands of P2P platform operators illegally raised funds from depositors before lending them to companies, such as property developers, offering investors lofty interest rates of at least eight per cent a year – or five times more than banks pay on deposits.
The People’s Bank of China has called for risks arising from the troubled industry to be resolved by the first half of 2020. The number of P2P platforms stood at 427 at the end of October, according to its data.
Wang Xiaoliang, another P2P victim in Shanghai, said investors had pinned hope on the governments to help them recover part of their losses. Most of them, however, are disappointed as the state would not intervened to bail out small investors
“It is unfair for small investors to foot the entire bill,” said the 40-year old restaurant owner who lost 200,000 yuan with one P2P platform. “At the very least, regulatory oversight and law enforcement have turned out to be inadequate”, he said.
The latest clampdown by authorities may sound the death-knell for the industry. In the case of Xinming Finance, local prosecutors have sued several individuals in a Shanghai court for illegal fundraising. It brings little consolation for Bao and other victims. She was told by local police they could not investigate Xinming as a company, just the former employees suspected of the illegal fundraising.
“We were greedy and attracted by the high returns,” said Bao, the retiree in Shanghai. “But we had the belief that it wouldn’t be wrong to follow the government’s directions.”