Business / Companies

SOE invests in P2P lending platform following new rules

(Xinhua) Updated: 2016-08-26 16:48

BEIJING - A Chinese State-owned enterprise (SOE) announced on Friday it will invest in an online lending platform after regulators rolled out restrictions to regulate the market.

China-reform Commercial & Industrial Development Group, an SOE with business in real estate and mineral resources development, signed a strategic investment agreement with peer-to-peer (P2P) lending platform, which provides financing for automobile purchases.

P2P lending, which refers to lending without a traditional financial intermediary such as a bank, has grown quickly in China in past years, as investors seek higher returns and small businesses and individuals find it easier to secure funds online.

A growing number of SOEs have sought investment in P2P lending platforms, betting on their growth potential. China had over 2,200 operating P2P lending platforms as of the end of July, about 113 of which had SOEs as stakeholders, according to, a third-party industrial information provider.

The agreement came two days after the China Banking Regulatory Commission introduced a string of new rules that prohibit P2P lenders from accepting deposits from the general public, prevent them from pooling investors' money for their own projects and cap the amount of individual loans.

The tightened rules will shake up the market and came as good news for online lending platforms that follow the rules, and SOE investment in P2P lending platforms may lead to stricter risk management, according to Wu Changhai, an Internet finance researcher with China University of Political Science and Law.

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