The new regulations are sorely needed, previously they only covered actual banks and not self proclaimed 'fintech' companies.

Ant gets to bankroll its lending by packing loans it just made into bundles and sell it as security with yields of 5%-6%, whereas the actual interest on these loans are around 14%-18%. There's no brake on this system and they can lend out practically infinite amount of money and transfer all risks to banks/asset management firms and consumers.

There's no chance that Ant can proceed through IPO with this new regulation as the profit structure of the business has fundamentally changed.

Absolutely. My take of the events is that Ant and other major players were able to slow down the legislation all theae years (because they have a world of cash) and when it eventually managed to get out Ant tried to push through IPO as soon as possible. That was probably one of the fastest IPO.

This is how things works in China. Most things are illegal, but tolerated.

That way it's easy to prosecute people 'legally' when you feel like it. It happens every day at every level of society.

Same as in Russia, or Brazil, or Argentina, or Mexico, or lots of other places.

Sure, if you show up from USA with no local language skills and no experience living outside of Milwaukee, and try to live exactly according to the explicit law, it's exactly like you say. But people actually from there have ways of navigating these obstacles. There's more potential for unpleasant surprises (for instance kidnappings) but if you know the lay of the land you can do alright. Maybe not advance that fast, these societies are not very upwardly mobile unless you're really REALLY acclimated and subscribed to the system, but they're still functioning societies of humans that need to get along, and if you can be cool, you can get along too.

What some Americans think they're entitled to do, which I've seen people try to do for instance in Small Claims court in US, is penetration test the legal system. They want to hack the legal code, instead of obeying fuzzy norms, common sense, suasion, and avoiding hacks that are seem too good to be true, they are magnetically attracted to these hacks. They then feel cheated when a judge oversteps his power ever so slightly to protect the integrity of the system from hacking.

Get real, China has tons of experience with usury, which is itself an Advanced Persistent Threat of the legal system and society, and if the borrowers wanted to default, the courts and social fabric would be what made the lenders whole. So of course the Chinese government is entitled to kill the IPO, it's a shitty and usurious IPO, and they'll be the ones holding the bag, so better to nip it in the bud.

Exactly - Russia, China, Indonesia, Turkey and other countries have tons of beaucratic regulation but in real life they are rarely vigorously enforced when you are small and keep a low profile. Then, when you grow you can pay for rules not being enforced. Only when you get really big the system is comming for you as in the case of Ant.

This is acctually convenient for some enterpreneurs who understand the system as it makes it easy and cheap to start small and experiment, see how the things work out.

This is the reverse of Western systems where usually small guy is expected to bear the costs of all the rules and regulations while big corporations get free pass.

So the Ant IPO situation was to be expected this way or the other. Mr Ma had been trying to cash out but he had been to slow to act.

I would like to point out that this is also true in the US, not just the bad guy countries listed below. For example, in the US we have criminalized: walking across the street in various circumstances, riding a bike (on the wrong part of the street, without a helmet, on the sidewalk, without a light), spitting, cursing, being loud, driving too fast, driving too slow, and a million other things. There’s basically 0 chance of any person living an entire day and not breaking some sort of minor law. This is repeatedly used in the US to justify things like stop and frisk of minorities.

Depends on where you are. If you land in the metropolitans or the provincial capitols then it's a lot better. The more remote you go the more local connections you need to do things. That's why some areas are actually completely avoided by investors.

When people say "China" sometimes they don't realize that China is as diverse as the whole Europe (but under a central gov) so there are a lot of discrepancies among different areas.

I don't think illegal is the right word to describe it, especially for P2P lending. It is a new thing, and it makes sense there is no legal framework to regulate it. The government has to watch how it lays out. In fact, in the last few years, many regulations have been introduced to regulate these companies. China is run by engineers, with new challenges appear every day, the legal system will always fall behind.

The article is not only suggesting the new financial regulation was drafted overnight, also the anti-monopoly regulation. If Chinese government works at this speed, there won't be anything it could not do.

Actually restrictions have been put into places over a few years. At the beginning, it was wild west, then companies need to have insurance, companies cannot hold the money, it has to put the money in an account overseen by a financial body. It is not true that the government has been watching the whole thing over the years and only take action now. If you read news, you could learn that the number of these companies have dropped from 3k to 15 and now below 10 due to regulations being put into places and bursts.