Shanghai vows to ramp up enforcement of P2P lending platform regulations

The Shanghai municipal government has announced it will soon launch a campaign to enforce compliance of financial regulations on the city’s peerto-peer (P2P) online lending platforms, according to a report by domestic website the Shanghai Observer, in a sign that local authorities will put order into China’s troubled fintech sector.

The Shanghai Office of the Leading Group for the Special Campaign against Internet Financial Risks said that it will investigate the local online lending industry and severely punish those committing illegal fundraising and financial fraud, as well as fugitive owners. The authorities have reasserted their support of law-abiding firms in a bid to promote a more orderly internet finance industry.

In the last 50 days, up to 163 P2P lending platforms have essentially gone out of business, stopping cash withdrawals from customers, and many have seen their owners run away and declared fugitives, chinanews.com reported.

“China’s finance industry as a whole is undergoing a bottleneck, and many small P2P operators are going bankrupt, triggering the government to act,” Li Chao, an analyst at Beijing-based consultancy iResearch, told the Global Times on Sunday.

Although many have criticized the P2P lending industry as a whole, Li also noted that the industry still fulfills a necessary function in China’s financial markets.