China has started a new round of checks on thousands of peer-to-peer (P2P) lending sites, according to a document obtained by Bloomberg News, as authorities continue their efforts to clean up the industry. Regulators are trying to steadily resolve risks by guiding some firms to exit the business, according to the August 13 document issued by the Internet Lending Financial Risk Management Working Leadership Group and co-signed by the China Banking and Insurance Regulatory Commission. The checks, which include self-review by P2P firms as well as inspections by local financial regulators, must be completed by the end of the year, the document said. China regulator orders bailout of peer-to-peer lenders by managers of distressed assets “This is good for the industry because there’s been a lack of regulation,” said Chen Shujin, a financial analyst at Huatai Securities in Hong Kong. “The policy direction now gives more certainty to the P2P industry that the good ones will be able to survive.” China’s clampdown on financial risk has weighed on P2P platforms for the past two years, but the pressure on the US$139 billion industry has intensified in recent months after the country’s credit markets tightened and the banking regulator issued an unusual warning to savers that they should be prepared to lose all their money in high-yield products. China comes up with 10 measures to tackle risks from troubled P2P lending sector The nation’s P2P platforms, which facilitate loans from mostly individual investors to borrowers willing to pay high rates of interest, have about 50 million registered users, according to official figures. At least 223 P2P lenders failed – which includes platforms that have halted operations or come under police investigation – in July, taking total failures to more than 4,500, according to Shanghai-based Yingcan Group. Outstanding loans dropped 26 per cent to 956 billion yuan (US$139 billion) last month from 1.3 trillion yuan in June, Yingcan data showed. Chinese peer-to-peer pioneer defends industry after wave of defaults creates panic among investors Those complying with the rules will be allowed to connect to a national product and information registration system, and some firms will then be permitted to apply for official business registration after a successful trial run, according to the documents. P2Ps will be subject to 108 queries, including whether platforms raised money from investors for their own use, rather than investing for other projects or lending to borrowers; offered implicit guarantees on product principal and return; provided illegal loans to controlling shareholders or affiliates; and if they distributed products by other financial institutions.