The culling continues: China’s P2P lending industry shrinks for fifth straight month

Photo credit: Txopi.

It’s more bad news for China’s P2P lending industry, according to industry tracking firm Wangdaizhijia. A new report issued by the firm has the total number of P2P lending companies in China shrinking in April, the fifth month in a row that’s been the case. In April, China registered 45 new startups, but the total P2P lending firm tally still dropped by 30, meaning that 75 P2P lending firms went out of business in April.

In total, China now has 2,431 active P2P lending firms, according to the report. In total, the country has 4,029 P2P lending firms registered, but many of these are either out of business or so troubled that they’ve suspended normal operations.

It wasn’t all bad news. Total transaction volume in the industry is still moving upwards, having grown almost five percent over the course of April. But since the industry’s size is shrinking, it seems that more of those transactions are being shared among a smaller number of top-tier companies, with smaller and less reputable firms missing out on more of the business.

The continued contraction in China’s P2P industry shouldn’t come as a surprise. Many felt the industry was in a bubble anyway, and 2016 has seen it dealt a series of heavy PR blows. A high-profile Ponzi scheme case cast doubts over the industry in late 2015, and by early this year banks were pulling out of the sector. Since then, additional Ponzi scheme allegations have emerged, and some firms are reportedly having trouble even finding office space for rent because trust in P2P companies is so low.