The future of peer-to-peer lending in China

This paper reviews the development and assesses the future of Peer-to-Peer (P2P) lending in China. Chinese P2P lending has expanded by a factor of 60 over the four years from 2013 and 2017, becoming much greater, both in absolute terms and relative to the size of the economy, than in any other country. The industry though has been plagued by problematic often fraudulent business models in what was, until 2015, effectively a regulatory vacuum. A strict new regulatory regime is now being introduced but its introduction, especially the requirements on capital requirements and registration, are substantially reducing the volume of P2P lending. We consider the future of P2P lending concluding it’s facing substantial uncertainties.