One third of China’s 3,000 peer-to-peer lending platforms ‘problematic’: new report

One third of more than 3,000 peer-to-peer online lending platforms on the Chinese mainland have been found to be problematic, an annual report on the nation’s internet finance says.

Since 2007, peer-to-peer platforms (P2P) have mushroomed nationwide, particularly in recent years. Small and medium-sized companies find it easier and cheaper to get loans through P2P platforms than borrowing from banks, while lenders are lured by higher returns offered by the online platforms.

However, the 2016 Blue Book of Internet Finance, published on Friday, found 1,263 of the P2P platforms on the mainland up to the end of 2015 were problematic, which included cases of fraud or firms going out of business.

This total included 896 P2P platforms that got into problems in 2015, with more than half involved in fraudulent tricks that took advantage of loopholes in regulations, the report said.

“China’s slow economic growth has led to plunging business for small and medium-size companies; It increases the risk of loan defaults,” the report said, adding that the risk of financing usually rose after accumulating over a long period.