Exclusive | Chinese peer-to-peer pioneer defends industry after wave of defaults creates panic among investors
Tang Ning has been feeling the heat lately in his role as head of the association that represents peer-to-peer (P2P) lenders in Beijing after a wave of platform defaults plunged the industry into crisis.
While he cautions investors to exercise better judgment to avoid fraudulent platforms, Tang insists that P2P is a solid investment method with a proven track record in China and overseas for more than a decade.
The reputable P2P platforms focus on diversified investments to safeguard returns, said Tang, who is chief of the Beijing Internet Finance Association and founder of CreditEase, one of the largest P2P leaders in China.
“The recent wave of defaults has been magnified greatly, especially by [bloggers],” Tang said, adding that the “exaggeration of severity among P2P defaults” created a state of “panic” that adversely affected the industry’s development.
China’s 1.3 trillion yuan (US$191 billion) P2P sector is undergoing a massive shakeout, with hundreds of lenders collapsing or exiting the business over the past two months, leaving consumers from all walks of life unable to withdraw their money from platforms that had promised much higher returns compared with traditional financial institutions.
