BEIJING/SHANGHAI - Overburdened Chinese regulators have left the peer-to-peer lending industry to poorly staffed local governments, according to ex-regulators, threatening the survival of an important credit mechanism once seen as crucial for the country’s economy.
In 2016, P2P platforms in China loaned $61.5 billion, versus a total 12.65 trillion yuan in loans made by commercial banks, according to central bank data. Without the expertise or numbers to confidently set standards, provincial regulators essentially froze, they said. “It was a mission impossible ... as the number of P2P platforms was so large at the time,” said a person at a northern branch of the CBIRC, who was not authorized to speak to the media.
“The authorities had no toolbox to supervise the firms; there was no offsite surveillance,” the person said. “This is why it all went wrong.”