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South China morning post
China’s P2P purge leaves millions of victims in the cold, with losses in the billions, as concerns about social unrest mount.
Karen Kong hasn’t had a good night’s sleep in the past half year, after learning that her mother invested all of the family’s savings, more than 1 million yuan (US $ 153,000), in little-known P2P (P2P). Concerns soon turned to anger and despair as Beijing-based Jieyue United made its way onto the Chinese government’s liquidation list, and the chance of getting its money back appears to be waning. “No one can give us a clear timetable for the deal, or even an answer,” he said, pointing to a pile of petition documents signed by investors, letters of appeal and photocopied evidence, all of which were rejected by local government agencies in Beijing. Get the latest insights and analysis from our Global Impact Newsletter on Big Stories Originating from China. “A lot of the investments are lifetime savings and retiree pensions. How can they make a living?” Kong asked, who lives in the eastern province of Shandong. “They must give us an explanation and a solution.” China’s P2P ‘financial refugees’ face an endless wait to recover from the $ 120 billion lost The veil on P2P firms has down, and the Chinese banking regulator announced last month that it had shut down all those platforms. However, the financial time bomb is far from being defused for millions of families invested billions of yuan, and there is a very real concern that mishandling the situation could lead to social unrest. Countless investors are anxiously waiting for their life savings to be returned to them. trying by all means – informing the police, filing complaints and lawsuits, and even protesting on the street – to recover as much as possible. The regulator said in August that some 800 billion yuan (US $ 122.7 billion) in investor funds have yet to The first of China’s P2P platforms emerged 14 years ago, and the industry experienced explosive growth after that support for internet financing was included in the 2014 government work report. Beijing hoped they would lead to greater financial inclusion and help solve decades-long financing problems for small businesses. In short, P2P lending platforms were touted as a model to reshape the nation’s financial landscape. More than 10,000 of these online platforms emerged in China, government data showed. At their peak, these companies occupied luxurious offices in large cities and some expanded their operations to remote counties, with annual transactions valued at 3 trillion yuan (US $ 460 billion) .CreditEase, one of the world’s first P2P companies when launched in 2006, it even rang the opening bell on the New York Stock Exchange in December 2015, to celebrate the initial public offering of Yirendai, its online platform. The share price topped US $ 50 in October 2017. Today it is worth just over US $ 3. The tipping point for the sector came in late 2017, when China’s leadership recognized the increasing risk associated with it. with numerous night flight P2P platforms and promised to take them out of the financial system. Guo Shuqing took on the risk elimination task in his dual role as chairman of the China Banking and Insurance Regulatory Commission and as party head of the People’s Bank of China, the nation’s central bank. Speaking at the Lujiazui Forum in June 2018, he pointed out the great risk embedded in the high-yield products offered by P2P platforms and warned that many could be illegally fundraising, or were simply Ponzi schemes, using new income to pay older investors. [a product’s promised] yield is greater than 10 percent, you must be prepared to lose all your capital Guo Shuqing, head of the central bank party [a product] if your performance exceeds 6 percent. If its yield is greater than 8 percent, the product is dangerous. If your return is more than 10 percent, you should be prepared to lose all your capital, ”Guo said. According to Wdzj.com, which compiles data on P2P platforms, about 56 percent of its investors are salaried, mostly with Fraser Howie, co-author of Red Capitalism: The Fragile Financial Foundation of China Extraordinary Rise, said the popularity of the P2P platforms highlighted how Chinese “innovation” used mobile devices to earn college degrees and monthly income ranging from 5,000 yuan (US $ 767) to 10,000 yuan. connectivity to create a business niche when the banking sector was not adequately serving the needs of the private sector or a consumer base seeking returns on their investments. However, “elites do not suffer when all the laobaixing [ordinary people] lose their savings on get-rich-quick schemes. “In Kong’s case, he said some 80,000 investors tried to recoup 14.1 billion yuan ($ 2.2 billion) from two Beijing-based Jieyue United platforms and many of Those people are economically and technologically unsophisticated seniors struggling amid the impact of the coronavirus. A 71-year-old victim’s account reveals the extent of greed in China’s $ 30 billion peer-to-peer loan fiasco. Panic settled in the group after they were told they could recoup only 20-30 percent of their original investments, leaving them with few options, none of which will see them complete again. Adding to their frustration is the fact that Kong says they don’t know how much money is left for reimbursement, even though the government has stepped in and taken over the accounts. “We demand open and fair dialogue co n the government disposition team, ”says an appeal letter representing about 200 investors, including housewives, apple growers, seafood traders and small businessmen, who say they are owed a total of 60 million yuan. “Fraud must be investigated, while loan recovery and repayment data must be published regularly.” The Post could not independently verify such claims, but similar issues are said to be plaguing investors on all platforms awaiting liquidation. Demonstrations have been held, including in Beijing’s financial district, for the past two years. At times, the police have stepped in to quell crowds. You realize how humble you are as an individual. Finally, it is we, the most humble citizens, who pay the price Ivy Meng, Shaanxi Province “We must come together and show our determination,” wrote an investor in Nasdaq-listed financial services company 9F Group this month, on Weibo, the Chinese equivalent of Twitter, as hundreds of people protested outside the company’s headquarters in Beijing. A video clip of the incident circulated on social media. A survey by Wdzj.com indicated that investors primarily want to know more about the payment details, including the schedule, and who is overseeing the process. About 58.3 percent of investors said they could accept a “haircut,” but insisted that it should be less than 30 percent. Almost a third of the respondents rejected the idea of not recovering all their losses, and the rest of the respondents were open to alternatives. Details on the size of the haircuts upheld in previous resolutions have not been made public, but they are believed to vary by country. The financial capacity of majority shareholders, government efforts, and the bargaining power of individual investors. Details gleaned from those involved in previous cases suggest that the process is likely to be lengthy, with only a small chance of recovering losses. And as time passes, the bargaining power of individuals seems to diminish. Beijing P2P owners and top executives hit with travel ban as China cracks down on online lending Ivy Meng’s mother in Shaanxi province invested all her life savings in a platform called Jucaimao, which Shanghai police investigated in 2018. Meng said not a single penny has been recovered by investors. “This is the cruel reality. We have largely given up, ”he said, trying not to remember the traumatic experience. “You realize how humble you are as an individual. In the end, it is we, the most humble citizens, who pay the price ”. However, Meng also said that he did not believe that there would have been large-scale defaults and collapses if regulators had not been quick to reduce the debt of the financial system. Two years ago, thousands of desperate P2P investors occupied Beijing’s financial street, where the office of regulators is located, and which is only hundreds of meters from the Zhongnanhai leadership complex, which served as a sign of the threat it posed. social stability. It helped justify the subsequent nationwide purge of P2P platforms. More from South China Morning Post: * China to focus on domestic consumption in 2021 as the US trade war fades from its priorities * More Chinese cities ease residency rules to boost local economies * Retirees Chinese gain tech savvy as Beijing chases ‘silver dollar’ * China’s latest digital currency test doubles from previous test, pushing merchants and consumers to embrace e-yuan * FDI from China increases 6.3 percent This article China’s P2P purge leaves millions of victims in the cold, with losses in the billions, as concerns about social unrest first appeared in the South China Morning Post. South China Morning Post news download our mobile app. Copyright 2020.
