BEIJING/SHANGHAI: After years of regulatory crackdowns, China's internet finance giants are quietly reentering the lending business, encouraged by Beijing's renewed push to boost consumer spending and ease household borrowing costs.

Four industry sources said that platforms such as Ant Group, Tencent-backed WeBank, ByteDance, and Meituan have cautiously resumed expanding their consumer loan portfolios, interpreting recent government signals as a green light.

"The regulatory landscape has become more accommodative," said one source. "With the economy under pressure, it needs large internet finance platforms to help drive consumption."

China began tightening oversight of internet finance in 2020, when regulators halted Ant Group's record IPO and imposed sweeping rules requiring fintechs to restructure into financial holding companies with bank-like capital requirements. The campaign froze a once-booming sector that had grown rapidly under a "develop first, regulate later" approach.

But Beijing's stance appears to be shifting. In August, authorities introduced interest subsidies on consumer loans and named Ant and WeBank as eligible lenders alongside traditional banks. Analysts see the move as a sign of normalization.

"We're entering a phase of regulated stability rather than crisis control," said May Yan, head of Greater China financials equity research at UBS.

UBS estimates lending through online platforms will grow 7.6 percent in 2025 to 5.4 trillion yuan (US$758 billion) and continue expanding at an annual pace of 7.4 percent through 2029. The sector's profits are forecast to rise nearly 10 percent this year to 110 billion yuan.

Firms remain wary, but momentum is building. ByteDance has expanded lending aggressively this year, two sources said, while Tencent has discussed growth targets but is proceeding conservatively.

Alibaba founder Jack Ma's appearance at an entrepreneurs' meeting chaired by President Xi Jinping earlier this year also boosted confidence that private platforms are back in favor.

"The general trend is improving," said an executive at one of China's top internet lenders. "Beijing still wants oversight, but it recognizes fintech's role in supporting consumption."

Industry experts say fintech credit can help households spread payments and support retail demand at a time of sluggish income growth. "If the economy is struggling, you need fintech," said Zennon Kapron of consultancy GL Insights. "It helps people feel comfortable spending when they can pay in instalments."

Yet risks are rising. Weak job growth and shrinking household incomes have pushed consumer defaults higher. Non-performing loans sold by Chinese banks and consumer finance firms surged 190 percent year-on-year in the first quarter to 74.3 billion yuan, with 70 percent linked to consumer debt.

"It's a real concern," said Christopher Beddor of Gavekal Dragonomics, who estimates 5–7 percent of adults have defaulted or fallen behind on loans.

Some borrowers used online loans for speculation instead of consumption, from stock trading to gold bets, leaving regulators uneasy. "Make no mistake, they still don't want new risks," said one executive at a major platform.

As one borrower put it bluntly: "These platforms lure you with instant approval. After a few payments, you realize it's a trap."