China to take hard actions against illegal fundraising

BEIJING — China will tighten its crackdown on illegal fundraising to protect people's interests and fend off systemic risks, the Office of the Inter-agency Anti-illegal Fundraising Taskforce said on Tuesday.

China saw 5,197 illegal fundraising cases in 2016, involving 251.1 billion yuan ($36.5 billion), down 14.48 percent and 0.11 percent year-on-year, respectively, according to the office.

It is the first time for both figures to decline, showing that the rising trend of illegal fundraising in past years has been contained, said Yang Yuzhu, head of the office.

However, Yang noted that the overall situation of illegal fundraising is still complicated and severe, highlighted by an increase in organized crime, online fraud and cross-regional crime.

China will strengthen supervision of intermediaries in private financing, enhance crackdown efforts against fraudulent advertisements and improve the legal system to guard against illegal financing, said Yang.

Key fields including online lending, private wealth management, rural cooperatives and private equity will be under greater regulatory scrutiny, Yang added.

Internet finance has grown fast in China in the past few years, as investors seek higher returns than bank deposits while small businesses find it easier to secure funds through online brokers. But risks have piled up too as regulations cannot keep up with the sector's development.

Among high-profile fraud cases last year, Ezubao, an online peer-to-peer lending platform, cheated members of the public out of nearly 60 billion yuan through fake investment projects it advertised from June 2014 to December 2015. Police opened investigations into the case in the first quarter of 2016.