China targets peer to peer lenders in crackdown
China moved aggressively yesterday to head off signs of growing risks in its financial and banking system, unveiling detailed rules to curb peer-to-peer (P2P) lending and intervening in its money markets.
In the past year, Chinese policymakers have been moving to keep credit growing at a reasonable pace to underpin the economy, while addressing vulnerabilities in the financial system.
But sharply increasing debt levels have raised alarm bells, most lately from the International Monetary Fund. A stock market crash last year is still fresh in investors' minds.
This year, officials have expressed concern about Chinese peer-to-peer (P2P) online lending platforms that they had once hoped would help spur growth.
Yesterday, the banking regulator and other government entities issued measures to curb a sector that has produced a raft of scandals. Almost half of the 4,000-odd lending platforms are "problematic", the China Banking Regulatory Commission warned.
The measures will probably leave about 200-300 P2P platforms by this time next year, said James Zheng, of Lufax, China's top lending platform.
"That's okay because they're cracking down on all the bad guys," he said at a conference in Hong Kong. "What doesn't kill will make you stronger." (Reuters).