Beijing has responded to the recent crisis in the country’s massive peer-to-peer (P2P) lending market with the laying out of 10 measures aimed at re-establishing financial stability, state media reports.
The proposed measures include a ban on local authorities, who oversee the administration of new financial services in their region, from allowing any new P2P platforms to open, state-run Xinhua said. Local governments should also set up “communications windows” with investors and to assist with compliance inspections.
Any borrower who tries to avoid P2P loan repayments will be included on a blacklist in China’s social credit ratings system.
China’s Rmb 1.49 trillion ($217.96 billion) P2P lending market was hit with a wave of closures in recent months with many investors finding themselves unable to withdraw their deposited funds and in some cases even contact company managers. Last week several hundred angry investors planned a protest in Beijing’s financial district, but this was quickly quelled by law enforcement.