Chinese peer-to-peer (P2P) lending could be the next target for centrist intervention, this despite the fact that state-controlled banks refuse credit to consumers and small businesses. This adds a twist to an interesting week that has seen stock markets going up and down like yo-yo’s. Rob Cain went so far as to suggest on Forbes that a Shanghai Summer could follow on the Arab Spring. I’ll stay out of trouble and stick with the Chinese peer-to-peer lending business.
Chinese Peer-to Peer Lending Reaches Wonga-Like Proportions
The UK’s Business Insider reports there could be as many as a million P2P investors in China working out of several thousand platforms, of which it deems 90 are at risk of going bust. This could further fuel the disquiet of the peasantry, whose ongoing loyalty Rob Cain believes depends on the Party continuing to deliver ‘steadily improving wages and opportunities.’
Case Study: Jimubox, Barry Freeman and Allen Dong
The explosion in Chinese peer-to-peer lending was sparked by Alibaba’s Yu’e Bao money market initiative in 2013, explains co-founder and cfo of Jimubox, Barry Freeman. He and his pal Allen Dong launched their counter-stroke at a time when there was a “perfect storm” of conditions for peer-to-peer lending in China the fresh-faced lad explains. Their churn so far this year has been £100 million / $160 billion.
Does Chinese Peer-to-Peer Lending Have a Right to Exist
Yu’e Bao and Barry Freeman clearly think so. They point to the emerging middle classes with discretionary money to invest, compared to a banking system that does not seem to realise China is shifting to a consumer economy. The Chinese government is in a dilemma.
Does it deprive its middle class of the opportunity to shop for a minor commercial flutter, or does it protect them nanny-like from risky decisions? Chinese peer-to-peer lending could be its next nemesis no matter the direction that it takes.