Peer-To-Peer Lending In China – 30% Interest, Pays Monthly…

Peer-To-Peer Lending In China by Henry Zhang, CFA – Matthew Asia

While I was on a recent research trip in China, I overheard something in an elevator that was quite worrisome. Two young office workers, who happened to be sharing the same elevator with me, were discussing an investment product that one of them had purchased a few months back. “The product offers 30% interest and pays interest monthly,” she told her friend. “I’ve already received several monthly payments. And I think it is trustworthy…”

I was quite astonished by the conversation as I walked out of the elevator, and wondered whether such a product could be real, especially in light of the fact that China’s one-year deposit rate...