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Effective measures stabilize Wenzhou economy

By Wang Huimin, Zhou Tiran and Feng Yihua (People's Daily)

16:27, November 01, 2011

Edited and Translated by People's Daily Online

Beijing, Nov.1 (PD Online) --The overall situation of enterprises in Wenzhou, Zhejiang province has stabilized despite mounting pressure.

Sun Fucai, chairman of Wenzhou Aomi Fluid Equipment Company, returned to Wenzhou. Xintai Group, Wenzhou's largest eyeglasses maker, has also resumed operations, which were suspended after its boss fled abroad to avoid high-interest loans. The good news in the past month has shown that the situation of the small and medium-sized enterprises in Wenzhou has stabilized.

Domestic enterprises have been facing great pressure since the beginning of this year due to sluggish international demand as well as rising costs of raw materials and labor. Wenzhou's economy has been severely affected because it relies heavily on exports. As a result, many small and medium-sized enterprises in the city encountered tough problems, such as cash shortages and several bankrupt bosses fled abroad.

Wenzhou accounts for nearly 1 percent of China's gross domestic product. Dozens of bosses have fled abroad for various reasons, representing only a tiny part of about 140,000 owners of small and medium-sized businesses in the city. However, due to exaggerated media coverage, "cash shortages," "bankruptcy," and "flee" have become new buzzwords describing Wenzhou. In addition, rumor has it that nearly 90 percent of Wenzhou's residents engage in private lending.

According to statistics from the Wenzhou Municipal Administration for Industry and Commerce, over 81,300 new market entities were established in the city from January to September this year, including over 14,700 new enterprises. Meanwhile, nearly 3,300 enterprises shut down.

Obviously, the number of the city's enterprises is still growing. As for economic performance, the total output value of the city's enterprises above the designated size grew nearly 15 percent in the first nine months of 2011 from a year earlier. Furthermore, Wenzhou remains one of the Chinese cities with the highest loan quality, and the rate of non-performing loans in the city's banks stands at 0.37 percent.

Protecting immediate and long-term interests of enterprises

Although the situation facing the small and medium-sized enterprises in Wenzhou is not as serious as many people think, the Zhejiang Provincial Party Committee and the provincial government are still making active efforts to help solve the immediate problems facing these enterprises and to promote their long-term development, which will boost the economic reforms in the province.

A series of supporting policies aimed at strengthening the foundations of the small and medium-sized enterprises were launched quickly:

The province allocated 1 billion yuan to establish the Re-Guarantee Funds for Small and Medium-Sized Enterprises.

It strengthened the supply of credit funds to reduce the small and medium-sized enterprises' financing costs. The province implemented differential supervision policies to practically solve the small and medium-sized enterprises' financing difficulties.

Normalization of private loans is being promoted, while supervision of private financial activities is strengthened and the participation of private capital in local financial reforms is encouraged.

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