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Private lending crisis highlighted the urgency of financial system reform

Private lending crisis in some private capital in developed areas, it is in the context of China's macro tightening, SME business more difficult, private capital from the formal financial system development under the result of several factors. Private lending crisis highlighted in China's leading State-owned commercial banks in the financial system of indirect financing, dual banking system and financial market reform lagged three problems. Should accelerate the pace of financial reform, break the borrowing quagmire.
since the first quarter of 2011, Wenzhou, Ordos private capital developed areas such as small and medium enterprises, especially small enterprises below designated size resulting from the capital chain rupture closed, shut down and owner avoidance phenomenon. According to the National Bureau for 3. 80,000 small micro-enterprise surveys, and there were no large areas across the country small enterprises fail, shutting down situation, current borrowing risk capital still controlled within the description "private lending crisis" is partial and temporary crises. But because the development and financing of folk capital entangled, and reflect a systemic chronic illness should be cause for alarm and reflection to avoid systemic impact on the economy.
, private lending crisis was under the background of macro policy tightening financing and borrowing is not standard under development the result of
(a) tightening since 2010 inflation pressures increase macro-economic policy
consumer price index starting from 2010 Rose quarter, annual average rose 3. 3%. Enter the 2011 inflation situation worse, CPI in July at the peak in recent years 6. 5%. In 2010, China's Central Bank raised interest rates 5 times and 12 times to raise the reserve requirement ratio. Gradually increase the intensity of tightening of monetary policy, appear relatively tight liquidity in the market.
SMEs harder to obtain loans from the banks, can only turn to private capital for short-term financing, borrowing rates climbed. People of Wenzhou branch data first quarter 2011 Wenzhou secured financing intermediaries borrowed money to fund continued loans of as much as 63. 7%, private lending is the monthly 3-5 times the Bank's benchmark rate is even higher.
(ii) SME financing problem continues
SME plays an important role in the national economy, but are subject to unfair treatment in the existing financial system. According to statistics, about small and medium enterprises in our country more than 42 million households, 99 per cent of enterprises. 8%, by SMEs in the industrial and commercial registration number 4.6 million individuals, private enterprises reached 38 million. Small and medium enterprises to create the ultimate product value and services to GDP of around 60%, 60% per cent of total Community sales of goods produced and paid taxes accounted for more than 50% provides 80% jobs around towns and cities nationwide. By the end of 2009, national SME loans of 14. 43 trillion yuan, accounting for only 36 of the loan balance of all financial institutions. 10%. Small domestic SMEs, lack of collateral, such as birth defects, lack of access to credit customers. Financial services for small and medium enterprises, particularly small enterprises to financial services are not in place. Since 2011, face significant upward pressure in raw material prices, labor costs, low content of enterprise technology, weak ability to resist risks, SMEs, especially small and micro-businesses operating there have been some difficulties.
(c) private financing of usury
in State-controlled financial system, China's rapid economic growth, building up a strong private capital, mainly private economically developed Jiangsu and Zhejiang provinces, represented by the Wenzhou; there are rich resources of Shanxi, Inner Mongolia and other places, as represented by the Ordos. 2011 and the medium-term, China folk debit and credit balances up to 3. It's $ 8 trillion. By the end of 2010, Wenzhou number intermediary financing up to 1879, including 186 security company, 1088 investment advisory company. Part private credit demand from the real sector, small and medium enterprises engaged in manufacturing since the tightening of bank credit, caused difficulties to get loans, which seeks high-cost short-term financing. Another part of the private credit demand from speculative capital, some private capital real estate, mining speculation in commodities, short-term hype of high profit opportunities. If asset prices fall, investment of speculative capital is tied up, capital chain rupture, unable to repay, form a lending crisis. In Ordos, real estate development funds come mainly from private lending. Until the end of February 2011, Ordos real estate development loans in the banking system 59. 700 million Yuan, accounting for 360. Investment of 700 million Yuan to 16. 55%. Ordos folk around 2 of the monthly financing costs. About 5%, and borrowing costs are generally 3% of the monthly, up to 4%-5%.
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