Sizing Up the Chinese Peer-to-Peer Lending Scene

By AltFi on 26th August 2014

P2P/Marketplace Lending

Peer-to-peer lending is sweeping through China at so swift a rate that it is nearly impossible to keep up with.

According to nonobank.com (a Shanghai-based platform), there were reportedly 1,184 registered P2P lending platforms on China’s mainland at the end of June 2014. No other country in the world can boast anywhere near such a multitude of platforms – but neither has any other country seen anything like the number of closures and fraudulent operators that Chinese peer-to-peer lending has had to endure. Nonobank.com has also suggested that the cumulative lending volume of the Chinese peer-to-peer platforms stands at 81.8 billion yuan ($13.3 billion). To provide some context, the flourishing UK peer-to-peer lending industry is worth just £1,922,841,906 – according to AltFi Data.

Sam Griffiths, MD of AltFi Data, lent some insight into the Chinese peer-to-peer lending scene:

“The Chinese market is at once the largest and the most frustrating in terms of trying to track data. A loosely defined regulatory framework coupled with the dizzying multitude of platforms has created a uniquely opaque sector.”

The ill-defined regulation referred to by Griffiths is also a key contributing factor to China’s many failed peer-to-peer platforms. ZeroOne Data has suggested that 20 platforms went bankrupt in 2012, and that a further 70 ceased to exist over the course of 2013. The China Banking Regulatory Commission is expected to implement a stricter regulatory regime in the not too distant future. Inevitably that system will signal the end of many more rogue operators, but it will be a crucial boost for the continued development of the sector as a whole.

Nonobank.com also offered a glimpse into the future, stating that peer-to-peer lending in China will hit 202 billion yuan by the end of the year – with more than 300 new platforms entering the fray. 

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