China War on Online Loans Makes Waves in New York: QuickTake Q&A

Chinese President Xi Jinping’s campaign to reduce risk in the financial system is being felt in New York. Regulators in China are targeting the estimated 1 trillion yuan ($152 billion) online cash micro-lending industry that has drawn criticism for exorbitant interest rates and underhand lending practices. The assault on the sector threatens to stymie any new listings of such lenders on New York’s stock exchange -- as well as spelling trouble for investors in the handful of companies that have already listed.

China plans to purge the country’s 157 online micro-lenders, leaving only large state-owned companies and the biggest internet firms intact with licenses, according to the International Financial News. Few of the existing lenders will survive, said the newspaper, which is managed by the state-run People’s Daily. Also this week, China halted approvals for new online micro-lenders. It’s a belated crackdown on an industry which has operated in a regulatory grey area.