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People's Daily Online>>China Society

Top court tackles private loan crisis

By Zheng Yi (Global Times)

13:47, February 22, 2012

The Supreme People's Court has ordered local courts to carefully handle civil cases involving private loans and protect legal grass-roots loan activities in a bid to "promote business development and preserve social stability."

Observers believe that the announcement comes in response to the ongoing controversy around the latest loan crisis in East China, particularly the case of Wu Ying, who was sentenced to death for "illegal fundraising" of 380 million yuan ($56 million).

In a notice issued on Sunday, the Supreme People's Court required that courts at different levels protect legal private loans and guarantee their effectiveness, while strengthening examinations of various forms of usury and fraud, in a bid to promote economic development.

Zhejiang Province was recently hit by a loan crisis when debtors unable to repay their loans fled the region, setting off a public panic and dealing a blow to the local economy.

Many believe the latest notice from the Supreme People's Court is aimed at preventing further chaos caused by the legal cases surrounding the loan crisis.

However, Zhang Yanfeng, the defense lawyer for Wu Ying, said the announcement would be of little help to her client.

"The announcement has little impact on Wu Ying's case, as Wu was found to have engaged in illegal fundraising rather than private loans," said Zhang.

Wu Ying, a businesswoman who rose from a humble background to build a business empire that included spas, hotels and property, was sentenced to death for "illegal fundraising," or pooling money outside the official banking system in December 2009.

Analysts say the notice does not herald a major reversal in the authorities' policy regarding private loans.

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