A Policy Shield.docVIP

A Policy Shield 　　Founded in October 2013， Baixin Financial Service Co. Ltd. is a Shenzhen-based company focused on online peer-to-peer （P2P） lending―the practice of lending money to unrelated individuals and small businesses without using a traditional financial intermediary， such as a bank. 　　With a registered capital of 10 million yuan （$1.6 million） and 30 employees， the company matches borrowers in dire need of cash and investors who wish to increase the value of their savings. By promising an interest rate upward of 15 percent to investors， the company soon raised more than 300 million yuan （$48.3 million） in investment after being established. 　　However， Baixin didn’t use the raised money in areas as it had promised to investors， but embezzled it for other uses. A year later， the chain of funds was broken， leaving more than 1，600 investors’ 100-million-yuan（$16.1-million） investment down the drain. In July， seven people on the senior management staff were arrested by local police. 　　Baixin is not an isolated case. As tempting as the high yield sounds， frequent occurrences of P2P websites’ bankruptcy or disappearance have alerted investors to the risks involved. Since the beginning of 2015， an additional of 419 P2P lending platforms have run into operational difficulties， 7.5 times that of the same period last year， according to W， a Web portal that tracks the industry. 　　As a segment of China’s booming Internet finance industry， what’s happening in P2P lending is a reflection of the burgeoning， yet unregulated， Internet finance sector in China. 　　After repeated public outcry for proper regulation， on July 18， China rolled out a guideline aimed at promoting sound and steady progress for the emerging industry. Issued by 10 Central Government ministries， the guideline encourages innovation in Internet finance while setting out measures to ward off potential risks. Though specific rules are still to be unveiled， many market players expect an end to the