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Wen Jiabao Urgently Tours South to Handle the Private Loan Crisis in Wenzhou

Over 90 owners of private enterprises in Wenzhou, Zhejiang Province have fled in order to escape from debts they could not pay, in an amount of more 200 million yuan (US$31 million). A loan crisis in intermediate and small business enterprises is erupting. Chinese Premier Wen Jiabao brought a group of top financial officials including Finance Minister, Xie Xuren; Governor of the People’s Bank of China, Zhou Xiaochuan; Chairman of the China Banking Regulatory Commission, Liu Mingkang, together with the Party Secretary and Governor of Zhejiang Province, to travel to Wenzhou to deal with the crisis. They held discussions with the local entrepreneurs and asked the local government to try to do everything they could to stabilize the economic and financial situation.

The trigger was that the intermediate and small enterprises could not get funding under the central govenment’s macroregulatory policy and therefore turned to private (underground) sources for loans that often required as much as 200 percent in annual interest.

Source: China Review News, October 5, 2011