Wenzhou gets private lending registry

(Ecns.cn)--A private lending registration service center was officially established on Thursday in the city of Wenzhou in Zhejiang Province, the so-called home of Chinese entrepreneurs, according to Xinhua News Agency.

According to reports, the center has been established to regulate the operation of the private lending market, control the risks of private lending, prevent illegal fundraising activities and protect the interests of private lenders.

The registry is the first of its kind in Wenzhou, co-founded by 22 private enterprises with a registered capital of 6 million yuan (US$952,380). It will operate as a corporation under the guidance of the local government.

Wenzhou has a highly developed private economy with thousands of private enterprises and abundant private capital. But many businesses here experienced liquidity problems in recent months because of the country's tightening economic policies and the slowdown in global markets.

At a State Council executive meeting presided over by Premier Wen Jiabao on March 28, the government selected Wenzhou, a city already known as the nation's private financing hub, to become a pilot zone for a series of financial reforms.

The lack of investment channels for private capital in the city has resulted in a dramatic increase in underground private lending at astronomical interest-rates. But the recent economic devastation and a collapse of the city's private loan network has blanketed the community in a harsh financial aftermath.

Effectively sorting out Wenzhou's problems and making financing serve the real economy are not only important for the healthy development of Wenzhou, but also of great pioneering significance for planned financial reform and economic development throughout the nation.