bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Frank Tang

The financial naivety of the public and a collective desire for unfeasibly high returns have helped fuel the proliferation of fraudulent investment schemes in China, according to an academic.
“China’s financial markets were opened in the 1990s and the pace at which they have developed has brought many risks,” said Zhao Xijun, deputy dean of the school of finance at Renmin University of China.
China declares war on get-rich schemes, citing risk of social unrest
 
“People are eager to achieve high returns, but they do not have adequate knowledge of the financial risks or how to screen [products] for them,” he said.
Zhao was speaking after tens of thousands of members of the Shanxinhui (Kindness Exchange) scheme, which was declared illegal by the government over the weekend, took to the streets of southern Beijing on Monday in protest. The mastermind behind the scam, Zhang Tianming, has been arrested.
Tencent co-founder brands LeEco a ‘Ponzi scheme’
 
“Chinese people have invested heavily in financial products, such as wealth management funds, but only for a very short period of time. They have very little experience,” Zhao said.
Monday’s protest in southern Beijing came after Zhang Tianming, the man behind Shanxinhui, which was deemed to be a pyramid scheme and therefore illegal.
China’s police chief Guo Shengkun said over the weekend that his officers will strike hard against fraudulent financial schemes to ensure a stable social environment ahead of the 19th party congress , later in the year, at which there will be a reshuffle in the highest corridors of power.
Just a few big Chinese P2P lenders seen surviving in sector tarnished by scandal
 
“There are huge risks in new types of financial crime in this era of the internet,” he told local police chiefs in Beijing.
“We must resolutely prevent financial crime issues from turning into systemic financial risks, to safeguard social stability,” he said.
The Beijing police bureau said in a statement on Monday evening that the “illegal gathering” had “seriously disrupted [the] social order of the capital city and violated laws”.
It added that a few people had been detained for questioning, but did not elaborate.
Illegal funds frozen in Hong Kong up 60 per cent, ICAC says as it prepares to host global conference on financial fraud
 
Zhao said that fraudulent investment schemes that use technology as a disguise are particularly hard to control, as they spread fast and their associated risks snowball in a very short period of time.
“There are also some frauds planned by staff of [otherwise reputable] financial institutions, which are more difficult to spot.” he said.
“A government crackdown is the only effective tool in curbing the spread of such economic crimes,” he said.
Beijing closes major road over rare protest triggered by company fraud probe
While pyramid selling has been illegal in China since 2005, high-profile scams continue to appear. Just last year, police busted Ezubao, a peer-to-peer lending company, whose 30-something owner managed to cheat 900,000 investors out of more than 50 billion yuan (US$7.4 billion) in just 18 months.
“It is in essence a problem that stems from China’s fragmented financial regulatory regime,” said Lu Zhengwei, chief economist at Industrial Bank in Shanghai.
“For quite a long period of time, internet finance did not come under [the jurisdiction of] any one authority.”
Speaking at the National Financial Work Conference earlier this week, President Xi Jinping urged officials across the country to closely monitor financial risks in their areas.
Beware the ‘grey rhinos’ of economic risk or ‘prepare for pain’, analyst warns China
The Shanxinhui scheme was launched in Shenzhen in 2013, with the lure of 10 to 30 per cent returns for investors. Bonus payments were offered to those who recruited additional “investors”. Recent mainland media reports suggested it attracted about five million members nationwide.


Weibo bans 52 accounts, some with millions of followers, in campaign against financial misinformation on social media

Zhang Xiaolei, founder of Chinese fintech firm Qbao, to serve 15-year jail firm for fraudulent fundraising

Eight charged in China over ‘Ponzi scheme posing as P2P lender’ that took US$9 billion

Eleven investors held after Chinese Ponzi scheme protests

China's ponzi scheme

Why Ponzi schemes are thriving in China despite crackdowns

People trying to join a protest against a fraudulent investment scheme in Beijing on Monday lie on the ground after being blocked by police. Photo: Kyodo

Security officials in Beijing on July 25, 2017, look tired a day after several thousand people staged a protest in the capital in connection with a crackdown on a company suspected of being involved in a pyramid scheme. (Kyodo) ==Kyodo

People stage a rare large-scale protest not far from Tiananmen Square in Beijing on July 24, 2017, in connection with a recent crackdown on a company suspected of being involved in a pyramid scheme. (Kyodo) ==Kyodo

People protest against police in Beijing on July 24, 2017, for closing the road to a gathering where at least several thousand people staged a rare large-scale rally not far from Tiananmen Square in connection with a recent crackdown on a company suspected of being involved in a pyramid scheme. (Kyodo) ==Kyodo

News

China

Money & Wealth

Economy

China Economy

Business

China Business

People are easily wooed by fraudulent fund companies’ promises of high returns on their investments


Why Ponzi schemes are thriving in China despite crackdowns

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}People are easily wooed by fraudulent fund companies’ promises of high returns on their investments

People are easily wooed by fraudulent fund companies’ promises of high returns on their investments