Beijing struggles to defuse anger over China's P2P lending crisis

Reuters ^ | August 12, 2018 / 2:02 AM / Updated 4 hours ago | Shu Zhang, Elias Glenn

[Zhang Fei]

BEIJING (Reuters) - Peter Wang was asleep at his home in Beijing last Monday when police officers arrived before dawn to detain him, saying he had helped organize a protest planned for later that day.

Across the city, others who had lost money investing in China’s online peer-to-peer (P2P) lending platforms - including some who had traveled from as far away as Shandong and Shanxi provinces - got similar visits from police.

By the time they were released, the demonstration they had planned using social media chat groups had fizzled amid a massive security response around the China Banking and Insurance Regulatory Commission (CBIRC) headquarters in the heart of Beijing’s financial district.

Instead of demanding that the government bail out the hundreds of collapsed P2P companies, those who made it to the protest area were forced onto buses and carted away to Jiujingzhuang, a holding center for petitioners on the outskirts of Beijing, according to two P2P investors.

“Once the police checked your ID cards and saw your petition materials, they knew you are here looking to protect your rights. Then they put you on a bus directly,” said Wang, who works at an auto repair shop. He joined a separate, smaller protest in a different part of Beijing after his detention. “There was no channel to solve any problems. All they care about was preventing any disturbance.”

The size of China’s P2P industry is far bigger than in the rest of the world combined, with outstanding loans of 1.49 trillion yuan ($217.96 billion), according to data tracker p2p001.com, run by the Shenzhen Qiancheng Internet Finance Research Institute.

P2P, in which platforms gather funds from retail investors and loan the money to small corporate and individual borrowers, promising high returns, started flourishing nearly unregulated in China in 2011.

[Zhang Fei]

At $200b, total p2p assets are a tiny fraction of China's $26T bank deposit base. And most of the p2p sector remains intact, although there are both liquidity and solvency concerns, founded or otherwise. As such, it's not an indicator of much, except what the bare minimum public reaction would be to a bigger event such as the collapse of even a minor bank, which would likely exceed the size of the entire p2p sector.

[Hostage]

I’m having a little confusion following.

A small group of P2P lenders failed? And they were picked up because of inventor complaints?

[tired&retired]

China has given it’s people a taste of freedom and capitalism. It will be difficult for the government to suppress the internal desire for freedom. I expect a revolution.

The only way around a revolution is an external enemy they can blame and a war. Problem is, with today’s communication devices, it’s hard to feed people bull and make them mushrooms.

[Rurudyne]

Bail outs?

If you take risks to get rewards you sometimes come up with bupkis.

What these people seemingly want, article taken at face value, is reward without risk.

[PGR88]

Like many things in China, a few positive comments from top officials, without any approved legal framework, set off an orgy of speculation and fraud in a new business sector.