Details of Wenzhou reform due soon, official says
BY 2012-05-22 20:58:42
The central government may officially issue detailed plans for Wenzhou's financial reforms as early as this month, a Wenzhou official has said.
The plan, which is expected to guide Wenzhou's ground-breaking financial reforms approved on March 28, will have 18 provisions, and it will be opened to public comment before being enacted, Zhang Zhenyu, head of Wenzhou's financial office, said in a speech to the Shanghai Advanced Institute of Finance on Sunday.
The 12-point blueprint allows residents of the coastal city to, among other things, invest privately and set up loan companies.
The reforms are aimed at making sure that the nation's private fund-raising and lending grow soundly after widespread defaults in Wenzhou last year.
With a deep tradition of entrepreneurship, Wenzhou is the nation's private capital powerhouse.
By bringing private money into the official banking system, Beijing is also hoping that cash-starved small businesses, which play a large role in supporting employment, will be able to obtain financing more easily and cheaply.
The central government's move will probably be an endorsement of a course of action proposed by Wenzhou last month, which plans to make financial services the city's chief industry by 2015.
Under the plan, Wenzhou is to have at least 30 rural financial institutions by the end of 2013. Those should include village banks, rural financial cooperatives and 100 micro-credit companies with 40 billion yuan ($6.35 billion) in net assets.
This year alone, the city is to add 30 micro-credit companies, which extend very small loans.
Meanwhile, six private asset management companies are to be set up by the end of this year, and a private equity fund, led by the city government, is to raise 3 billion yuan by 2015.
Wu Jinglian, an economist with the People's Bank of China, said at a forum in Shanghai that he is pessimistic about the reforms in Wenzhou. He said it is hard for a single region to change a nationwide financial system, and that the Wenzhou reform plan has a "certain meaning" but won't change the financial system fundamentally.
Chen said one of his office's next steps is to guide more private capital into the city's 11 rural financial cooperatives and turn them into regional joint-equity banks.
The office is also asking banking regulators to allow the city's private capital to set up financial leasing and trust companies.
Wenzhou will also be the first place in China to try out junk bonds, part of a national attempt to let small and medium-sized enterprises issue high-yield bonds through private placements, he said.But he added that requirements for such bonds are "too high".