The era of unrestrained P2P online lending in China has come to complete end with the closure of the last few platforms still operating in the sector.
The number of operating P2P online lending platforms had fallen to zero by mid-November from over 5,000 at the sector’s peak, according to remarks made on 27 November by Liu Fushou (刘福寿), chief lawyer of the China Banking and Insurance Regulatory Commission (CBIRC), at the Caijing Annual Conference (财经年会).
As of the end of June 2020 China’s P2P lending platforms had fallen to just 29, a number which further dwindled to 15 by the end of August, 6 by mid-October and 3 at the start of November.
Liu previously said in early November that the disposal of P2P online lending had accelerated, and that the “era of wild growth in online finance as represented by P2P has gone and will not return.”
China also issued the draft version of strict new regulations governing online micro-loan operations on 2 November, in a move that many analysts believe to be the decisive factor behind the suspension of the USD$36 billion IPO of fintech giant Ant Group on the Shanghai and Hong Kong bourses.
P2P platforms first made their appearance in China as early as 2007, and by 2013 had become a byword for online financial innovations. Chinese financial regulators initially adopted a light-touch approach to the sector, which permitted major fraud and corruption issues to proliferate.
The turning point for the P2P sector came in early 2016 with the Ezubao (e租宝) Ponzi scheme scandal, that prompted Chinese regulators to launch a mounting crackdown on the country’s online lending platforms.