Regulatory shortcomings have choked P2P industry

Tough segment: Li Yonghui, chairman of Fincera, is seen here speaking to the media. The company was once Hebei province’s largest P2P firm by loans but the company has since left the space. — Reuters

OVERBURDENED Chinese regulators have left the peer-to-peer (P2P) 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.

The resulting difficulties, as the industry tries to grapple with pyramid scheme scandals and runaway bosses, underline the struggles China will face as it tries to balance financial risk and innovation.