P2P lending sees growing scrutiny

As China advances its supply-side structural reform, a large number of struggling financial companies will be eliminated, thus exposing once-concealed online financial risks.

Peer-to-peer, or P2P online lending platforms, reflect the explosion of online financial risks. Statistics provided by independent P2P portal wdzj.com shows that there were 3,858 P2P in operation at the end of last year, and 1,263 of them had operation problems. Most of these platforms promised an extremely high return rate, as much as 10 percent annually. Meanwhile, they illegally established capital pools.

Platforms which have been reported with problems have mostly crossed the red line of illegal fund-raising. The problem is not with online finance itself but rather a lack of supervision, according to a report jointly released by the China Europe International Business School's Lujiazui Institute of International Finance and the Beijing-based Internet Finance Institute.