For more news and videos visit ☛ http://english.ntdtv.com
Follow us on Twitter ☛ http://twitter.com/NTDTelevision
Add us on Facebook ☛ http://me.lt/9P8MUn
There are growing concerns over China's private lending market, after a corporate boss in southeastern Zhejiang Province reportedly fled overseas because of debt he could not repay. It sparked a mass protest over the weekend, with employees and suppliers demanding the money they're owed.
[...]
Hundreds of Hu's employees marched down the street of Wenzhou on Sunday to demand their pay. They got word their boss had fled the country, leaving behind a massive debt. The demonstration temporarily brought local traffic to a standstill.
[Wenzhou Resident]:
"I was stuck in traffic on Sunday, at the overpass bridge. The traffic was blocked for about two hours. I managed to take a detour afterwards."
Hu's company owes as much as two billion yuan, or 313-million US dollars, according to some Chinese media estimates. More than half of this debt was sourced from private lenders with sky-high interest rates. This has added to recent worries that China's private lending market could be failing. With authorities tightening fiscal policies to curb inflation, small and medium businesses are being turned away from state-run banks. Instead, they're forced to turn to high cost and largely unregulated private lenders for funds.
[Chen Zhifei, Economic Commentator]:
"2011, according to many analysts, has been the toughest year for private companies since the economic reform. I've read reports on surveys revealing that 90% of small and medium enterprises have not gotten a cent from banks this year."
Hu is the latest of Wenzhou's corporate bosses to flee from giant, unserviceable debt. While the southeastern city has been home to a manufacturing boom, a string of high profile bankruptcies have happened since April this year, with some owners choosing to literally run away from their financial troubles.
