Public protests are on-going at Beijing after the recent crackdown of 76% of China’s Peer-to-Peer (P2P) lending platforms, wiping out an estimated $217.96 billion funds from its investors. What started out as a promising venture, with its peak period on 2015, came crashing down due to funding outflows and stricter regulations.
According to CNN, the Chinese government is already conducting an investigation to more than 218 P2P lenders who shut down. Several suspects are already detained but some are still missing.15
Peer-to-peer lending became famous after the stricter policies of bank credit back in 2010. Many are hooked by the P2P’s guarantee returns of 10 percent or more, but it’s basically an empty promise. Some are just using this tactic to embezzle money since P2P is closely watched by the Chinese government. Given this situation, the Chinese government is seeking to increase control over P2P as the scheme ballooned into a trillion-dollar business.
Decline of P2P
The continuous fall of P2P lending platforms caused panic amongst the investors. In an article published by Lending Times, there are three major reasons why the P2P declined. One can be attributed to sudden pullouts from its investors; two, the increasing costs of compliance and finally, the stricter credit environment. Fraud is another issue, with numerous websites attracting investors only to find out weeks later that the owner ran away with all the funds.
‘Financial Refugees’
Now, people who invested all their money and savings are left devastated and some even committed suicide. There are a lot of people still hoping to get back the money they’ve invested but protesting won’t do a thing. Police and authorities are taking an action. According to Reuters, authorities have collected blood samples and fingerprints of possible protesters and prevent these people from travelling to Beijing.
