Beijing's war on the credit boom

A campaign led by Vice-Premier Liu He sets out to reduce the danger of uncontrolled lending. P2P lenders, the property sector and billionaire Jack Ma’s empire are all being targeted. Some analysts fear an overcorrection could stifle innovative areas of financial activity and, ultimately, economic growth.

Chinese President Xi Jinping and Vice-Premier Liu He have trained their sights on billionaire Jack Ma’s Ant Group.PHOTO: REUTERS

Like many small businesses across China, Mr Zheng Weijun's freight company had struggled to obtain credit from the state-dominated banking system. But in 2018, the 12-lorry business discovered Fincera, a peer-to-peer (P2P) platform in Hebei province that collected money from retail investors starved of returns and channelled it to borrowers, mainly small trucking and logistics companies.

"We qualified for a 200,000 yuan ($41,300) loan and used it to expand the business," Mr Zheng says, adding that Fincera charged his company 9 per cent interest annually. "The traditional financial system does not reach down to us."

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