Chinese P2P lending has been all-but squeezed out of existence by regulators in response to widespread issues with fraud in the once-flourishing sector.
As of the end of September there were only six P2P online-lending platforms in actual operation in China as compared to over 5,000 at the industry’s peak, according to figures released by the China Banking and Insurance Regulatory Commission (CBIRC).
September marked the 27th consecutive month that the volume of funds and the number of participants in China’s P2P platforms had posted a decline.
Shanghai-based fintech veteran Rich Turrin has referred to P2P lending as the “evil twin” of China’s flourishing digital payments systems, with a laissez-faire approach to the P2P market on the part of Chinese regulators leading to an unconstrained boom in both platforms and associated fraud issues.
Chinese regulators began to put heavy pressure on the domestic P2P sector in 2019 following reports of endemic fraud, bringing the number of regularly operating platforms down to less than 600 by the end of that year.
As of the start of 2020 a total of nine Chinese provinces had banned P2P lending outright, including Shandong, Hunan, Sichuan, Chongqing, Henan, Hebei, Yunnan, Gansu and Shanxi.