An initial 300-yuan ($42) loan began a downward spiral that dragged Peng, 22, into a 100,000 yuan debt borrowed from more than 20 “peer-to-peer” (P2P) lending platforms.

“No matter how much money I made, I had nothing left for myself and had to use almost all of it to pay off debt,” said Peng, who calls the debt trap a “bottomless pit.”

This year, a new complication emerged: an official crackdown on online lending shuttered thousands of providers that Peng had used to acquire new money to pay old debt, forcing him to go cap-in-hand to his parents for a bailout.

The government had previously encouraged internet-based P2P financing as a way to make the best use of personal savings to support China’s slowing economy.

Leading platforms such as Lufax, an affiliate of the giant Ping An Insurance Group, and Dianrong.com – both based in Shanghai – provided credit on easy terms, typically by matching up borrowers with individuals willing to lend.

Led in part by hordes of young tech-savvy Chinese like Peng, China’s P2P lending market multiplied from almost nothing in 2012 to become the world’s biggest, but so did accusations of bad debts and fraud.