Wednesday, September 28, 2011

Wenzhou Update

The count is now 9 SME operators have absconded.

The SME owners have amassed debts of up to 2 billion yuan (HK$2.43 billion) each, a report by the China News Service said.
That's $311 million USD. Each? It's not written well with the parenthetical so I'm dubious. That's a lot.

I seriously think the difference this time (meaning this round of financial collapse in China) in that the debts are at Western scales. That wasn't true in the 1990s. The central government can't just cut a check, pat the banks and local governments on the head, and send them back into the fray. What they are going to do, I have no idea. Even with an authoritarian regime, it's not clear what they can do.

Those who have solicited credit from underground sources are those that have moved into ventures that require heavy capital outlays, researchers believe.

"Most of those haunted by loan sharks have invested in property, mining and private equity ventures," Ba Shusong, an economist at the State Council's Development Research Center, told Xinhua News Agency.

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