In recent years, there has been a surge in illegal loan intermediary activities in mainland China. The latest case exposed involves a young “post-95s” and overseas returnee girl named Xiaoye from Chengdu, Sichuan. Over the course of more than a year, Xiaoye fell into a debt trap due to “routine loans,” ultimately mortgaging property worth nearly tens of millions of Chinese yuan to repay the debts.
According to a report by Red Star News on November 18, 2023, Xiaoye, who returned from studying abroad, hoped to start her own business. One day, by chance, Xiaoye received a loan phone call.
“At the beginning, Xiaoye borrowed 130,000 yuan with a one-month repayment agreement,” revealed the investigating officer. After deducting fees and interest (around 50,000 yuan), Xiaoye only received 80,000 yuan.
As the repayment deadline approached, a second loan company contacted Xiaoye voluntarily. “The company claimed they could help you repay first, with only a little extra interest.” Xiaoye borrowed another 300,000 yuan, after deducting fees and interest (about 100,000 yuan), she paid off the initial 130,000 yuan, leaving her with only around 50-60,000 yuan.
Gradually, the cycle of borrowing to repay spiraled out of control.
Between November 2023 and March 2025, through five loan companies and eleven lenders, employing tactics like “bill swapping” and continuous borrowing, the loan amount escalated maliciously to over 12.6 million yuan.
Xiaoye mortgaged a property located on Tianfu Street. “The property loan was evaluated at 9.5 million yuan. After pre-loan funding of 2.2 million yuan, Xiaoye needed to repay the microfinance company 5.9 million yuan, and another loan company 520,000 yuan, after deducting fees, Xiaoye actually received very little.” Realizing she was unable to repay, Xiaoye finally informed her family, who felt deceived and reported the incident to the police.
Xiaoye suffered losses exceeding tens of millions.
According to the police, suspects He, Wu, and Fu, along with others, utilized a housing leasing company in Chengdu to engage in illegal lending activities under the guise of housing leasing.
“Routine loans” have two characteristics: the criminal group disguises themselves as a housing leasing business, using a normal leasing model on the surface to carry out loan and lending activities, making their operation more covert. If borrowers cannot repay, instead of resorting to violent debt collection, they directly file lawsuits in court. Borrowers either mortgage their houses or sell them at low prices.
The company was involved in illegal lending activities with over 200 loan victims, with accumulated illegal lending funds exceeding 49 million yuan. The criminal group involves members from multiple provinces and cities.
In reality, prevention against “routine loans” is difficult. In April of this year, Professor Jiang Shuguang from the Department of Economics at Shandong University told Caixin Media that when he was writing a paper on internet lending behavior, he applied for a loan from JD Finance’s JD Gold Loan on the JD app. Originally intending to stop before final disbursement, he was surprised that before he clicked “agree,” the loan was already disbursed with interest accruing.
Jiang Shuguang stated that although he applied for JD Gold, he received a Paipai loan with an annual interest rate of 24%, lending him 108,000 yuan. Upon realizing the disbursement, Jiang immediately opted to settle the loan, but the lender demanded an interest fee of 3,240 yuan in addition to the full principal repayment. Calculated this way, it amounted to a daily interest rate of 3%, annualized at 1080%, and he was unable to make early repayments on the JD platform.
Reports revealed that Jiang’s experience is not isolated, with many others expressing similar encounters of applying for loans on JD Finance but receiving loans from other platforms like Paipai with interest rates appearing to be around 24%, but actual interest rates upon early repayment far exceeding 100%.
Many netizens expressed dissatisfaction with the online lending situation. “What used to be universally condemned as ‘usury’ has now been legitimized through capital integration.” “This sinful online finance is legalized robbery and fraud! Do not be deceived, or you’ll lose everything, with disaster looming!”
Some netizens believe this is a result of the Chinese Communist authorities’ inadequate supervision and inaction.