Thousands of alleged victims of peer-to-peer (P2P) lending platforms recently gathered near the Beijing headquarters of China’s bank regulator, the Banking Regulatory Commission (CBRC), to seek redress after losing their investments.
Local authorities sent scores of police—as many as 30,000, according to Radio Free Asia (RFA)—to disperse the protesters who had gathered on Aug. 6.
P2P allows people to lend to each other while earning high interest rates—higher than those offered by banks. Firms that operate a P2P platform connect yield-hungry investors with cash-strapped individuals or small businesses.
But many of the P2P platform operators have recently folded. Some firms turned out to be scams. Other companies weren’t able to fully return customers’ investments and instead offered to pay back the money in installments, or with stock options, as an alternative. For the least fortunate of investors, some firms closed down without any explanation.
More than a hundred buses, transporting tens of thousands of police, arrived in Beijing, according to Voice of America (VOA), to guard the areas near the CBRC office. Many P2P victims, including two who spoke to VOA, were arrested and escorted onto buses before they could voice their grievances.
P2P petitioners are escorted to a bus by security personnel in Beijing on Aug. 6, 2018. Greg Baker/AFP/Getty Images
The overwhelming police presence forced the cancellation of a scheduled group petition.
P2P victims from around the country were prompted to protest in Beijing after remarks by CBRC chairman Guo Shuqing at a financial seminar in Shanghai on June 15. According to state-run Xinhua, Guo warned Chinese citizens with plans to invest their savings should beware of the dangers of illegal fundraising. Savers should be prepared to lose all their money if they lend at more than a 10-percent interest rate, as it’s likely a scam, Guo implied.
Guo’s remark was interpreted as a sign that Chinese regulators would soon move in on the poorly regulated P2P industry. Coincidentally, just a day later, the collapse of one of the country’s main P2P operators, Shanghai-based Tangxiaoseng, was reported. Many investors were unable to get their money back.
Since then, stories of P2P operators defaulting, shutting down, or having their executives disappear have sprung up. According to an Aug. 5 report by Chinese business newspaper Yicai, more than 180 operators have reported some kind of financial problem.
