Chinese authorities respond to P2P losses
Supreme People’s Court deems private lending involving fraud criminal
New measures concerning online lending have signaled that Chinese authorities are further weighing in on the aftermath of peer-to-peer (P2P) platforms going bankrupt, an industry lawyer said.
Some online lending platforms have recently been encountering rising risks. As such, authorities have come up with measures to curb illegal fund transfers, prevent platform owners from running away and stabilize financial markets, according to a recent meeting held by the Internet Financial Risk Special Rectification Work Leading Group Office, the Xinhua News Agency reported on Sunday.
Authorities must build up channels for lenders to safeguard their rights, and online lending platforms should establish communication mechanisms and enhance transparency within their operations, according to meeting delegates.
Local governments also need to set up explanatory policies to respond to public inquiries, meeting delegates noted.
These measures were meted out in response to the aftermath of some platforms going bankrupt, which had incurred damages on investors, Li Min, contracted research fellow with the China E-Commerce Research Center, told the Global Times. “Local authorities had not clarified beforehand about how to deal with a situation whereby an owner runs away with investor money,” he said.
Complaints arose in China after some online peer-to-peer (P2P) lending platforms began going bankrupt a few months ago, with their investors bearing significant losses.
In July, 113 P2P platforms in major cities including Beijing, Shanghai and those in South China’s Guangdong Province halted their operations, industry information site wdzj.com said in a report on Friday. As of the end of July, 1,645 P2P platforms were operating normally, a decrease of 11.7 percent compared to the number at the end of June.
Online lending platforms have also been urged to draft liquidation and payment plans in line with laws and regulations, and authorities will step up crackdowns on malicious evasions of debts and will include those companies committing such acts onto China’s social credit system, according to the meeting.
Meanwhile, the Supreme People’s Court has come up with more details about ascertaining illegal private lending activities as criminal, as some cases have been classified as civil action, Li noted.
The court noted that cases whereby lenders come to possess properties of others through defrauding and intimidating should be considered criminal offences, thepaper.cn reported over the weekend.
“It will be more legally binding for private lending activities,” Li said.