Latest News:  
Beijing   Cloudy/Overcast    13 / 6 ℃  City Forecast

English>>China Business

Commentary: Experimental financial reforms

By Yi Xianrong (China Daily)

08:23, November 27, 2012

New measures aim to legalize private lenders, ease SMEs' funding difficulties and open up more investment channels

On the basis of the State Council's approval for comprehensive financial reforms in Wenzhou and a targeted regulation jointly issued by the People's Bank of China and another eight State departments, the Zhejiang provincial government published details of the reforms on Friday, which drew extensive attention from home and abroad.

The move came after an underground banking crisis erupted in Wenzhou in September last year. Due to concerns that the crisis might spread to the country's normal financial system and perhaps trigger broader financial risk, the central government immediately gave the green light to launch experimental financial reforms.

The specific reforms so far revealed show that the goals include easing the financing difficulties of small and medium-sized enterprises and increasing domestic and overseas investment channels for private capital. However, the reforms should have a wider range. The financing difficulties facing SMEs do not exist in Wenzhou alone; and while there are already overseas investment channels for the overflowing local private capital, even mature channels in developed financial markets can hardly satisfy all needs of individual investors.

A key target of the financial reforms in Wenzhou should be to bring its booming underground financial sector, which has grown particularly rampant in recent years, into the open and then onto legal and normal operating tracks.

With a high degree of openness to the outside and the success of its export-driven economic model, Wenzhou has taken the lead in capital and wealth accumulation. Such an environment has resulted in the fully fledged development of small and medium-sized private enterprises, which account for 96 percent of the city's industrial enterprises. Against this backdrop, the private credit market has flourished. Surveys indicate that about 90 percent of households and enterprises in Wenzhou have participated in non-governmental financing. A decade ago, around 90 percent of private financing was targeted at the real economy, but nearly 70 percent of it has flown to the housing market or unlicensed credit in recent years. The interest rates for private credit can be up to 100 times higher than official lending interest rates.

【1】 【2】

We recommend:

World's highest-altitude civilian airport to start operations

Global sales of Samsung's Galaxy Note 2 tops 5 mln mark

China to open Beijing-Guangzhou high-speed rail route slows

China Telecom starts iPhone 5 pre-orders

China's MA700 to take flight in 2016

13th Int'l Automobile Industry Exhibition

Rural grid upgrades to ensure electricity

Staff members of bus company sort notes, coins

Galaxy Soho building in Beijing


Leave your comment0 comments

  1. Name


Selections for you

  1. Flight lands on China's aircraft carrier

  2. PLA troops in HK conduct 15th rotation

  3. N. Korean’s real life through the lens

  4. Rare beautiful sceneries in deserts

  5. Attractive beauties at auto exhibitions

  6. Samsung's Galaxy Note 2 tops 5 mln mark

  7. Terrible! Bizarre mummies around world

  8. Dream passionately, love completely

Most Popular


  1. China's arms’s capacity for independent innovation
  2. China's economic growth well on recovery track
  3. Call for fairer income distribution
  4. Encourage spending, not saving
  5. Car firms show up in droves
  6. Please show more tolerance for 'vulgar culture'
  7. Build society's bottom line for children
  8. China, Japan, S Korea should promote FTA talk
  9. Photovoltaic spotlight turns to domestic market
  10. 'Background competition' can trap anyone

What’s happening in China

Bullet train attendants receive trainings in China's Shenyang

  1. Fog shrouds Liuzhou City, SW China
  2. China launches Yaogan XVI satellite
  3. Taizhou Yangtze River Bridge opens to traffic
  4. Anchor details years of sexual coercion
  5. Gas and coal explosion, deadly traffic accident