In China, Shadow Banking Moves Online

Websites spring up as peer-to-peer transactions take off
The skyline of the financial district in Pudong, Shanghai Photograph by Stefan Kuhn/Gallery Stock

Jack Qiu spends evenings in front of his laptop in the southern Chinese city of Guangzhou, lending money to strangers online. An accountant by day, Qiu may be a better loan manager by night than most bankers. He says only two investments out of his 80,000 yuan ($12,525) total, each worth 100 yuan, have gone unpaid. Nonperforming loans at a Chinese bank, on average, would be almost four times as high. “I don’t care what the money is used for, because that’s beyond my control,” says Qiu, a 30-year-old certified financial planner who jumped into online lending in May by registering at, one of the largest such sites in China. “For me, the key is to identify those who have at least a willingness to honor their debt, so I need to keep my eyes wide open.”

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