No relationship to "trade war". This is all internal, and they've been building toward it for several years. China's P2P lending sector has been growing in a totally nutso fashion for some time now. Little P2P companies popping up BY THE HUNDREDS and gathering a bunch of investors online, and then going bust. There's been a bit of a recent crescendo.
This is related however to growing debt levels in China. Business and personal debt has been growing fast, and the rapid growth in China's economy over the last several years is fueled in part by a lot of debt. At some point there is a possibility of a crack in that debt bubble, and a following recession. Some folks think the P2P difficulties are an early sign of a little crack. Could be.
In the US, the regulators stepped in several years ago and made LC and Prosper change the legal form of the instruments they were selling and make regular SEC filings and established a regulatory framework for P2P investing. In China the regulators are way late, and apparently waited until thousands of investors in hundreds of P2P sites lost a lot of money. Fraud, lack of regulation, frenzy. The regulators failed to do their job.
It is common for fintech folks to bash the SEC for not getting with the program on some new concept, but frankly, what has happened in the US P2P investment was better than what is happening in China.
The SEC is taking heat most recently for not allowing Bitcoin ETFs, and I'm 100% behind them on that decision.