P2P platforms: Status quo and issues

P2P online lending emerged in China around 2007 to ease difficulties that small and micro enterprises, as well as individuals, faced in getting loans. From 2013, P2P lending has enjoyed explosive growth, going from a dozen to several thousand in a year. In the absence of regulations, such explosive growth sowed the seeds for future risks. According to incomplete statistics, in 2014, the criminal offences, the amount of money involved and the number of victims, in terms of illegal fundraising involving P2P online lenders, rose 11, 16 and 39 times the levels in 2013, respectively.

Due to a range of complex internal and external factors, such as the macroeconomic environment and deleveraging, liquidity tends to be tense, and capital chain breaks are speeding up in the P2P field, resulting in the widespread collapse of these platforms. This article presents a brief analysis of the status quo, main business model and existing issues of P2P online lending.

STATUS QUO

Existing P2P platforms and operating status. According to statistics from WDZJ and the Evergrande Research Institute, there were 5,970 P2P platforms as of the end of 2017, about nine times the number in 2013. With the recent launch of intense regulatory measures, fewer than 2,000 P2P platforms remained as of August 2018.

Zhang Wenliang is a partner and Yuan Haibo is an associate at Merits & Tree Law Offices