Visitors look at posters of wealth management products offered by P2P lenders at the Global Mobile Internet Conference in Beijing on May 5, 2014. Photo: CFP
Recent P2P events
Beijing-based peer-to-peer (P2P) lender xwlicai.com was reported over the weekend to have vanished, leaving more than 300 investors unable to claim their investment and underscoring the high risks in the country's unregulated P2P business.
The P2P website, xwlicai.com could not be opened since Wednesday and some investors in the company's products have reported to the police, accusing the company of fraud, China National Radio (CNR) reported Sunday.
An investor surnamed Yang from South China's Yunnan Province said he had invested a total of 200,000 yuan ($31,995) through xwlicai.com since mid-May after he found the return rate of a product offered by xwlicai.com on its website reached more than 20 percent, according to the CNR report.
Yang could not access the xwlicai.com website since Wednesday, and Beijing Xiongwei Guangda Investment Management Co, which was claimed by xwlicai.com as its owner, denied it had any connection with xwlicai.com when reached by Yang, the CNR report said.
The report claimed xwlicai.com had swindled more than 300 investors, involving millions of yuan.
Beijing Xiongwei Guangda Investment Management could not be reached for comment on Sunday.
Hubei Zhongzhou Investment Guarantee Co, which xwlicai.com identified as its guarantee partner, had already said in a statement posted on its website on May 28 that it had nothing to do with xwlicai.com, in response to queries from investors in recent weeks.
In another similar case, Shenzhen-based P2P lender Wangwangdai, which sold financial products via China's largest search engine Baidu, vanished in April, causing 600 investors a combined loss of 20 million yuan.
In response, Baidu announced in April that it had removed links to around 800 P2P platforms from its recommendation list.
P2P lending companies match people who want to invest money with individuals who seek loans, skipping traditional financial intermediaries such as banks.
"Due to lack of regulation on P2P lending platforms and no entry barrier, some people with ulterior motives have entered the industry, leaving Chinese investors with limited investment options vulnerable to frauds and illegal fundraising," Xu Hongwei, founder of P2P lending consultancy wangdaizhijia.com, told the Global Times Sunday.
P2P lending has developed rapidly since the end of 2011 as part of the country's unregulated shadow banking system. But due to no entry threshold and legal ambiguity surrounding the operations of P2P lending, defaults and frauds have become common.
"Rising incidents of fraud related to P2P lending is caused by the fact that some P2P lending firms have evolved into illegal fundraising firms who draw in the money and make loans themselves instead of directly matching investors with borrowers," Zeng Linghua, chief analyst at Shanghai-based fund consultancy Howbuy, said Sunday.
Previously, no government body had officially claimed to be responsible for the supervision of P2P platforms, Yan Qingmin, vice chairman of the China Banking Regulatory Commission (CBRC), said during the Boao Forum for Asia in April, noting that the CBRC would take the lead in supervising P2P.
News portal yicai.com reported on Friday that the CBRC is working on a series of strict rules to regulate the P2P lending, and is expected to roll them out by the end of this year.
Market players hoped that the CBRC could adopt a "negative list" approach by telling what P2P companies cannot do, but it will likely use a white list approach to issue licenses to those meeting their capital and risk control requirements, said Xu from Wangdaizhijia.
