In a city in southern China, Mr. Cheng, a resident, expressed to Epoch Times, “Online lending is a vampire. I was cheated by online lending. I can barely survive now.”
Currently, online lending platforms in China are very developed, and many Chinese people rely on borrowing to sustain their livelihoods. However, this can easily lead people into a debt crisis, including falling victim to usury and facing violent debt collection. Analysis suggests that the Communist Party of China encourages individual loans under the pretext of stimulating the economy and consumption, but in reality, online lending platforms have become another trap for the Chinese people, allowing the CCP to exploit them.
Mr. Cheng mentioned that he used to make a living through investments, previously borrowing from banks and using credit cards for cash advances, with interest rates ranging from 5.5% to 19% across different banks. However, a few years ago, after his credit rating was restricted by the public security bureau, he was unable to obtain loans from banks and, as a last resort, turned to online lending.
A recent report by BBC Chinese revealed that for the online lending industry in China, from application to money transfer, even five minutes is considered too long and unprofessional. Small and medium-sized loan platforms often advertise with “low risk” to compete with bank loans and large loan platforms, using big data risk control models.
Chinese human rights lawyer Wu Shaoping told Epoch Times that lending companies believe they have the means to ensure they can recover the money, mainly because their interest rates are very high and they assume only a minority of people won’t pay back. Therefore, even though they may have some bad debts, they still profit overall.
Mr. Cheng’s online lending contract had an annualized interest rate of 35.9%, but with membership fees and unclear “compound interest,” it exceeded 36% (i.e., 3 points of interest). He stated, “In fact, online lending, with interest rates exceeding 3 points, is usury and illegal.”
In August 20th, the CCP issued “Opinions on Handling Criminal Cases of Illegal Lending,” explicitly stating that the actual annual interest rate for private lending should not exceed 36%, otherwise considered “usury” and prosecuted as a “criminal offense.”
However, insiders informed BBC that the CCP authorities focus on “boosting domestic consumption,” operating within their defined limits.
As per the report, the Chinese financial service platforms are reducing the “feel of borrowing” to promote borrowing and consumption, aligning with the CCP’s recent encouragement of consumption.
Jiang Pinchao, CEO of a US finance and real estate investment company, mentioned that the CCP has printed excessive money to stimulate the economy and consumption, leading to a downward economic trend. he criticized the CCP’s policy as having ulterior motives and setting traps to exploit others further.
Mr. Cheng revealed he turned to futures trading to repay high-interest loans, diverting over 70,000 RMB from his earnings in the past two to three years to pay platform interests, essentially working for the online lending platforms.
Wu Shaoping noted that in the past few years, the CCP has been promoting the idea of “not saving but borrowing to live.” This implies driving China towards an economic growth model based on debt, aiming to stimulate consumption – encouraging the frenzied development of lending platforms, akin to “draining depleted water bodies for fish,” exploiting the Chinese people’s high income expectations and risks.
Mr. Cheng lamented that in early September, he was ill-treated by the online lending platform, resulting in malicious recalls. Being sucked dry by the “vampire” online lending, he is now penniless, owing debts to the platform and facing violent debt collection, including threats, coercion, deception, and insults.
Insiders explained to BBC that China’s credit supervision system for small and medium-sized loan platforms is relatively deficient.
Jiang Pinchao blamed the lack of regulation on corruption and the political agenda of the CCP, pushing for loan consumption and economic stimulus, creating challenges in economic supervision.
Wu Shaoping stated that these loan platforms and financial companies are “related parties” of the CCP, as they cannot obtain “financial licenses” without connections, leading to issues of interest transfer and corruption.
He pointed out that violent debt collection is tacitly allowed by the CCP, as it is more effective in recovering debts compared to court proceedings, with these loan companies having protection from repercussions.
Reports reveal that mainland China’s medium-sized loan platform “PPDAI” in Shanghai was exposed in 2021 for “high interest rates, violent debt collection, privacy breaches, and thousands of complaints,” yet it continues to operate normally. Reportedly, “PPDAI” has cooperated with China’s national weightlifting team.
Citing data from consulting firm Longzhou Economic Consultation, BBC reported that in 2024 alone, 25 to 34 million people in China were in arrears with personal loans, doubling from 2019. The number of risk borrowers in China is expected to reach 61 to 83 million at present.
Why are so many Chinese people falling into a “debt crisis”?
Wu Shaoping suggested that under the false advertising of online lending platforms, some people mistakenly believe that borrowing money is easy with low risk, leading them to fall into a debt trap.
He argued that fundamentally, China has become a society seeking quick success, with severe trends of showing off and materialism. Many people showcase a false image of success for prestige, some see borrowing as a skill, taking loans from one platform to repay another in a cycle of debt. This kind of behavior, once defaulted, can escalate debts into a disastrous situation.
Mr. Cheng shared that people he knew who turned to online lending were struggling with business cash flow, facing losses in their businesses, bankruptcy, debt, and unemployment, compelling them to resort to online lending.
He believes that the main reason why many Chinese people are living on debt is the economic depression, especially caused by the three years of lockdown due to the pandemic, resulting in numerous closures and job losses. Additionally, the burden of high housing costs, medical expenses, education, and other financial challenges have drained the people’s resources, all controlled by the “red family of the Communist bandits.”
He criticized the CCP for harming its own people and expanding its influence globally, labelling them as the most evil clique in human history, a tumor on present society, with no moral boundary.