Online lending companies: a thorough cleanup of the old and the young

Mass retrenchment after "No.9" rules

A sweeping shakeout is under way in China’s online lending ecosystem after the rollout of the so‑called "9号新规" (Regulation No. 9). It has been reported that a circulated layoff spreadsheet shows steep cuts at multiple firms — Shuhe Technology (数禾科技) reportedly cutting about 30%, Mashang Consumer (马上消费) shrinking its technology team from more than 3,000 to roughly 200, and Du Xiaoman (度小满), the Baidu (百度) spin‑off, initiating at least a 10% round of layoffs while pausing some lending lines. Are these isolated cost saves? Hardly — the list reads like an industry map of collapse: contracting funding channels, rising compliance costs and evaporating arbitrage have exposed business models built on regulatory gaps.

Why the model unravels

The regulator’s new requirements hit three weak points at once: centralized bank oversight and whitelist management force banks to cut risky third‑party partners; bans on disguised fee collection remove a major revenue lever for platforms; and explicit limits on outsourcing core credit decisions strip away the “light‑asset” playbook many fintechs used to scale. It has been reported that smaller banks, unable to meet the new risk controls, are simply exiting cooperative internet lending — Urumqi Bank (乌鲁木齐银行) has said it will stop such partnerships from October 1, 2025 — leaving fintechs without funding pipes or partners.

Built in an era of easy money — now reversed

For Western readers: the boom in consumer online lending in China was driven by a familiar mix — ample liquidity following global quantitative easing, mobile internet‑enabled consumption scenarios, and data/algorithmic underwriting that made small, dispersed loans profitable. Platforms and their bank partners profited from high nominal yields and low marginal capital intensity. But when regulators start closing gaps, those high yields are not a sustainable moat. Reportedly, several listed platforms showed the strain in 2025Q3: Qifu Technology (奇富科技) grew revenue by 19.1% while net profit fell 20.36%; Yiren Zhike (宜人智科) had slight revenue growth but profit down 8.47%. Loan volumes fell sharply for many formerly fast‑scaling names.

Outlook: consolidation, retrenchment, and a tougher playing field

Some players will adapt; others will be forced to shrink or exit. Headline moves already include Focus Media (分众传媒) announcing a 7.91 billion yuan disposal of its 54.97% stake in Shuhe Technology — a concrete sign that investors are reallocating away from the sector. For regulators, the motivation is clear: curb systemic risk and end what Beijing views as regulatory arbitrage. For investors and managers, the message is equally plain: the era of “easy money” fintech arbitrage is over. The question now is which companies can rebuild under stricter capital, risk and disclosure regimes — and which will be swept from the market.