Credit Constrained China

China will start recording plaintiffs in credit disputes. Repeat litigants will be investigated for illegal lending and if so, they can collect principal and interest, but the latter will be assessed at the benchmark lending rate.

I want to highlight this factoid within the story. Remember China has been fighting illegal lending for years now and the banking system continues to funnel credit into large and state-owned companies.

Caixin: Province Aims to Weed Out Illegal Lenders With New Court Register
Private lending outside the official banking system has boomed in China over the past few years, especially through online platforms, and much of it is estimated to be carried out by individuals and companies who don’t have a license to offer credit and charge usurious interest rates. With a growing number of borrowers now defaulting on their debts and the government cracking down on illegal and violent debt collection, lenders are increasingly turning to the courts to get their money back.

China’s courts dealt with 2.24 million private lending disputes in 2018, up from 1.42 million in 2015, according to data from the Supreme People’s Court.

No comments:

Post a Comment