Evidence is mounting that the once-dramatic growth of China’s peer-to-peer (P2P) lending industry is tailing off, following intensified supervision from regulatory and enforcement agencies.
Figures from start-up data trackers Yinghan.com and Yingcan Group show that the total number of platforms operating in China has dropped steadily over the past year, while the monthly rate of new businesses is slowing.
Yinghan.com, an affiliate of US comparison site Bankrate, said that in March, only four new P2P start-ups launched in China – down from 12 the previous month. Meanwhile, the number of active platforms has declined for four consecutive quarters to 2,572.
According to Yingcan Group, the number of lending outlets currently under investigation as so-called ‘problematic platforms’ has risen to 1,523. The tracker also echoed Yinghan.com’s reading of an industry on the wane.
Their figures emerged as a report from China’s state-run Securities Times revealed that police in Shenzen have begun to collect information from P2P firms working in the city, with a view to acquiring greater insights into their business models.
Site visits were conducted after the total number of platforms that have gone out of business in China through operational problems reached 1,490 by 31 March – suggesting that authorities are becoming increasingly suspicious not only of the motivations behind P2P start-ups, but the segment’s broader sustainability.
Meanwhile, Bloomberg has reported that regulatory officials entered the Shaoxing branch of Nanjing lender Easy Richness, which has so far raised more than ¥10bn ($1.6bn) for individuals and business ventures.
Further details on the visit from TechInAsia.com indicate that Easy Richness is under investigation as a Ponzi scheme.
While the lender has denied the allegation via a statement on social network WeChat, it has been informed that the probe may be widened to encompass some of its other bricks-and-mortar premises.
The developments follow the mid-March publication of figures from China’s Supreme People’s Court showing that in 2015 it processed 1.42 million cases involving P2P lenders, involving funds amounting to ¥820.75bn ($126.4bn).
As the year drew to a close, the platform Ezubao – ostensibly a P2P lender like any other – ceased trading without notice, and was eventually unmasked as a Ponzi scheme that had defrauded at least 900,000 investors. Officials are still mapping out the scale of the platform’s criminality, and arrests were made in connection with the fraud as recently as January.
Yinghan.com analyst Li Xianrui warned that jitters over China’s P2P segment have raised regulatory thresholds for budding market entrants and placed additional compliance burdens on existing lenders. “The unqualified will struggle to survive and may even have to exit the