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Dagong releases China's first-ever black list of online lending platforms

A Chinese mobile phone user looks at information of Weicaifu, the wealth management service of Sina, in Guangzhou, south China's Guangdong province, on August 1, 2014. Photo: Imaginechina

Dagong Global Credit Rating Co. on Wednesday unveiled China's first-ever blacklist of 266 online lending platforms which it said lacked sound information disclosure standards and risk management capabilities, five months after the company launched an Internet finance credit information platform aimed at giving creditors a correct assessment of debtors' creditworthiness.

Beijing-based Dagong Global said that the online lending platforms on the blacklist violated China's related regulations and rules, failed to offer adequate information, had debt default problems and misled investors by promising inflated profits. The agency made the assessment using its own evaluation criteria, which it says is scientific and impartial and can stand the test of the market and history.

The blacklist was compiled after an appraisal of 1,395 online lending platforms across China during an eight-month period, said Dagong Global, adding that 65 percent of the 266 online lending platforms come from Guangdong province, Zhejiang province, Shanghai and Beijing, with Guangdong province topping the blacklist with 56 problematical local online lending platforms.

"The emerging problems in the Internet finance industry pose a potential threat to the development of the nascent sector," said Wang Zaixiang, president of Dagong Credit Data Co., adding that money raised by the online lending platforms on the blacklist, which should have been used by cash-starved small and medium-sized companies, mostly went into the property market and the interbank market.

The problems of peer-to-peer (P2P) lenders, like incomplete information disclosure, lack of competence in repaying debts and making profits and risky management, have sabotaged the lenders' credibility and will have a negative impact on liquidity, noted Wang.

Besides the blacklist, Dagong Global also released an early warning list of 676 online financing platforms, which unexpectedly includes Ping An Insurance (Group) Co.'s, one of China's biggest P2P lending platforms.

In response to a reporter's question about the reasons for putting on the warning list, Wang said, "Big does not mean good, and scale does not mean safety." But he did not give further details about Dagong Global's decision to put the Shanghai-based P2P lending platform on the early warning list.'s trading volume in December reached over 2.5 billion yuan, making it the second-biggest online lending platform in China, according to statistics from, a Chinese online lending data provider.

The release of the blacklist and the early warning list is the latest effort of Dagong Global to become an authoritative provider of Internet finance credit information, as the company is embellishing its international image as a competitive credit rating firm which can rival Western "big three" rating firms.

However, the blacklist and early warning list, on the domestic front, have fueled concerns about the possibility of capital redemption by investors, as 60 percent of China's online lending platforms are included in either of the two lists.

The Beijing Internet Loan Industry Association issued a statement late Wednesday, saying that the feasibility and accuracy of Dagong Global's Internet finance blacklist and early warning list is arguable, as it made the assessment mainly based on the information disclosed by the online lending platforms it examined.

"The release of the lists (the blacklist and the early warning list) has made a splash in the (online lending) industry, but whether they can stand the test of the market remains to be seen, as Dagong Global lacks two-way communication with the online lending platforms (it examined)," said Zhang Lijun, who studied the credit rating systems of Canadian financial institutions for years. Credit rating involves several stakeholders, and the objectivity and fairness of a rating should be achieved through a change in traditional ways of payment, added Zhang.

The China Banking Regulatory Commission has recently established a special department, which the commission said may take charge of the P2P lending sector. In September 2014, the commission pledged to tighten management of P2P businesses, including new registration rules, requirement of third-party fund trusteeship and external audits.

The trading volume of China's P2P lending platforms hit 250 billion yuan in 2014, doubling the number in 2013, said the Internet Society of China on January 2.

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