lots of stories re China P2P lending problems

[Fred93]

SCMP is South China Morning Post, a well-respected English language Chinese newspaper.

https://www.scmp.com/news/china/economy/article/2159372/china-comes-10-measures-tackle-risks-troubled-p2p-lending-sector

https://www.scmp.com/tech/china-tech/article/2156832/chinese-peer-peer-pioneer-defends-industry-after-wave-defaults
As many as 114 P2P platforms failed from July 1 to July 24, with 14 shutting down without warning, 97 suspending fund withdrawals after facing liquidity problems, and three under official investigation, according to online P2P data provider Wangdaizhijia.

https://www.scmp.com/business/companies/article/2155839/shanghai-savers-sound-alarm-more-p2p-lenders-fail-return-funds

https://www.scmp.com/business/companies/article/2155357/investors-left-rue-losses-fraudulent-chinese-p2p-lenders-collapse

https://www.scmp.com/business/banking-finance/article/2158533/police-thwart-protest-rallies-victims-chinas-underground

An unknown number of Chinese investors who have lost their life savings in the country’s peer-to-peer (P2P) lending industry mounted a failed attempt at a demonstration before the banking regulator on Monday, amid heavy intervention by the police in Beijing’s financial district.

Hundreds of uniformed police, ancillary police and plain clothes officers patrolled several city blocks around Finance Street, where the central bank, as well as the regulators for stocks, banks and insurers are located.

Alex Li, a 35-year-old organiser of the demonstration, said disgruntled investors from all corners of the country had gathered in the capital city over the weekend to petition the central government.

“At least 8,000 investors have made it to Beijing,” Li said by phone from Beijing. The number could not be immediately verified.

Hundreds of investors had attempted to gather outside the head offices of state agencies on Monday, including the China Banking and Insurance Regulatory Commission (CBIRC), to press for an official investigation into the suspensions of fund withdrawals in more than 100 lending platforms last month,

[rawraw]

I've been wondering if this trade war would start to crack their financial system. Wonder if it's related

[Fred93]

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.

[Rob L]

Really interesting stuff of which I've only been vaguely aware. It's been crazy.
One day you wake up to really bad news in China. Later you look back at things like this as an early indication.
Thanks for the post!

[rawraw]

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.

Things like this tend to have external catalysts - just like bubbles continue until some catalyst starts a cycle in the other direction. The fall of their stock market could be impacting the perception of risk and redemptions.  But who knows if it is related or not. Curious timing but I don't follow China enough to have an opinion.

[James Adams]

Thank you for the information about China! Personally, I prefer to invest in Europe, I am old-school but sure there can be potential in China as well.

[DoyleDit]

I wish I knew more about China. I feel like the potential is huge over there. Does anyone know of a company that serves sort of as a middle-man over there?

[lascott]

I wish I knew more about China. I feel like the potential is huge over there. Does anyone know of a company that serves sort of as a middle-man over there?

And people think LC is risky!

China P2P Lending Crackdown May See 70% of Firms Close
By Alfred Liu
January 1, 2019, 9:15 PM CST
https://www.bloomberg.com/news/articles/2019-01-02/china-s-online-lending-crackdown-may-see-70-of-businesses-close

The number of Chinese peer-to-peer lenders may drop by 70 percent this year, a research firm that tracks the industry says, as the nation intensifies a crackdown on riskier forms of financing.

As few as 300 companies will remain by the end of the year, according to an estimate from Shanghai-based Yingcan Group. The number of operators dropped by more than 50 percent to 1,021 during 2018, it said, adding that there’s been no new entrants into the market since August.

Chinese leaders are dramatically shrinking a market that spawned the nation’s biggest Ponzi scheme, protests in major cities, and life-altering losses for thousands of savers. Authorities are planning to wind down small- and medium-sized P2P lending platforms nationwide, people with knowledge of the matter had earlier said.

[Jessica King]

Yes, that`s why I prefer to invest in Europe, rather than Asia. There are still countries in the EU, which I did not pay attention to earlier, but which, as it turns out, hold a lot of potential, like Hungary, for example. Who would have thought, right?  I recently found this article https://realtybundles.eu/learn/blog/12-real-estate-in-hungary/59-5-factors-that-make-budapest-attractive-to-real-estate-investors, which really got me thinking about the real estate investments in Budapest. Who agrees with me? Should we consider Europe more?