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Wenzhou credit crisis eases up

Wenzhou’s credit crisis is under control and some of its closed enterprises have recovered operation. The city government promised to introduce more measures to improve the financial situation in Wenzhou a month after Premier Wen’s visit.
According to the statistics released by the city government on Saturday, the Gross Domestic Product (GDP) of the city for the three quarters of this year exceeded 230 billion yuan ($36 billion), a 9.5 percent increase compared to the same period last year.
“The credit crisis in the city has been controlled by implementing a series of government policies, ensuring the amount of bank loans available in the end of October reached 604.3 billion yuan, 5.45 billion yuan more than in September,” said Chen Jun, the deputy secretary-general of Wenzhou city government, at the news conference on Saturday.
This signals an obvious cooling down of the underground bank related crisis in the city. Till the end of October, 38 cases related to illegal private lending activities in the city involving 3.6 billion yuan were filed and 39 suspects arrested.
“The number of suspects decreased by 37 percent and the money involved by 40 percent in October compared to September, which proved that the situation had been eased,” said Chen.
With assistance from the local government, recovery and restructuring of the shut-down enterprises is also being put into practice, gradually.
Five enterprises in the city started restructuring aided by over 50 million yuan contributed by the government and 15 runaway enterprise owners had returned to the city by the end of October.
“We’re keen to minimize the number of runaway cases that raise insecurity in society and ensure that all the small- and- medium-sized enterprises (SME) have enough money to pay salaries to the workers on time,” said Chen.
One of the companies to have resumed its production at the earliest was Zhejiang Center Group, which did so on Oct 20, with most former employees returning to work.
Hu Fulin, the company’s president, fled to the United States on Sept 21, leaving behind debts of up to 2 billion yuan, including 1.2 billion yuan in high-interest loans from underground banks. He returned to Wenzhou on Oct 10 to restructure the company with the help of the local government.
“All operations of management and production lines in the factory were back to normal as it used to be, which is a good sign, inspiring us to work harder and feel more confident about the future of the company,” said Huang Hui, an officer from the administration department of the Center Group who had worked in the company for about four years.
Huang says that there are about 1,500 employees in the group, including around 80 percent returned workers.
In order to solve the problem of limited bank loans available for SME, an emergent fund with 1 billion-yuan lending facility to SME was launched by the government, to help enterprises needing immediate financial support.
In addition, over 5 billion yuan was added to the money available in the whole bank system in the city for October while the real economy involved companies received extra loans worth over 6 billion yuan.
“Ten to 15 small-loan lending companies will be launched by the end of the year to ease the high-pressured private lending activities, as the first step of the three-year plan for small-loan agencies,” said Chen.
Local associations also launched funds to extend loans to its members, to ensure that all companies could work their way out of financial difficulties.
A mutual aid fund for overseas Chinese businesses worth 50 million yuan was launched by Wenzhou overseas Chinese businesses association to offer instant financial support to the troubled overseas Chinese companies on Nov 2.
“We’ve signed an agreement with the Bank of China and the Industrial and Commercial Bank of China to manage the fund, which was contributed by 50 successful overseas Chinese businesses,” said Chen Chen, an officer from Wenzhou Overseas Chinese Businesses Association.
Both banks also raised the loan limit to 500 million yuan for overseas Chinese companies. – China Daily

Posted by on November 7, 2011. Filed under Banking-Finance,Economic News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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