The Shenzhen government is asking peer-to-peer companies to submit self-audited reports before the end of this month.
In July, hundreds of P2P lending platforms, where people can invest their money in programs listed on the website with high yield, collapsed and defaulted on their debts involving hundreds of trillions of yuan in capital, resulting from deleveraging activities of the government.
This triggered panic and petitions.
Some platforms went bankrupt since they were established as Ponzi schemes, collecting money for the managers without investing. Other platforms died when managers escaped with funds when the company was exposed to the risk of a run on a bank, leading the company to fail to return the money.
There was a time when it was an attractive investment choice when China offered four trillion yuan (HK$4.58 trillion) after the 2008 financial tsunami.
However, the investments had low productivity as credit was so easy to access, leading to high risks.