China’s three-year clampdown on the peer-to-peer (P2P) lending industry chopped the number of platforms down to just three from about 6,000 at the peak, according to the nation’s top banking regulator, reported Caixin.
Chinese authorities launched a sweeping crackdown on the unruly P2P industry three years ago as the sector was plagued by fraud and defaults. At its peak, P2P platforms issued more than $150 billion of loans from 50 million investors. CBIRC Chairman Guo Shuqing said investors still held more than RMB 800 billion ($115 billion) of unpaid debt from failed P2P platforms as of August, said Caixin.
China will support “reasonable innovation” in the financial industry as long as risks are under control and innovation serves and contribute to the real economy, said Liu Fushou, the chief legal counsel of the China Banking and Insurance Regulatory Commission (CBIRC), said Friday at a routine State Council briefing. Meanwhile, all financial activities, including fintech, should be brought under unified regulation, he said.
The regulatory body’s next step will be to crack down on illegal financial activities, improve the regulatory framework with full coverage of all risks and treat businesses that conduct the same type of financial activities equally, Liu said.