Businessman sues People's Bank
A CHINESE entrepreneur is challenging the all-powerful central People's Bank of China over just how far private businessmen can go in China's socialist market economy.
One combatant is the flamboyant Shen Taifu, founder and president of the Beijing Great Wall Mechanical and Electrical Group, who claims he wants to use new fund-raising methods to make his high-tech firm into the Chinese equivalent of General Motors.
The other is the conservative People's Bank of China, which hopes to block pyramid investment schemes like those that have rocked other developing economies.
With tears in his eyes, Mr Shen yesterday denounced the People's Bank, saying he was taking it to court, and vowing to more drastic measures if necessary.
''I don't fear death,'' said Mr Shen. ''I can take even more extreme action.'' As a result of the dispute, Mr Shen said Great Wall, a privately run company, would have to be sold to foreign investors.
The row - an illustration of how the government sometimes finds the race for fast-paced economic growth more than it can bear - heated up when Great Wall filed a suit against the People's Bank at the Beijing Intermediate Court, saying the bank had interfered with its business operations.
In a circular, copies of which Mr Shen gave to reporters yesterday, the People's Bank said that Great Wall had over-extended itself financially and ordered the company to stop raising funds.
The bank said Great Wall had been committing itself to repaying loans taken via ''technology contracts'' at high interest rates.
''Great Wall is actually issuing bonds in a disguised form and the amount of the bonds is far more than its own net capital,'' the circular said.
Claiming that Great Wall had violated three sets of state regulations, the bank ordered the company to write a self-criticism and repay all loans within ''a definite period of time''.
In response to the charges, Mr Shen claimed that Great Wall's borrowings of 900 million yuan (officially about HK$1.21 billion) were equivalent to only about a 10th of the company's capital.
Mr Shen said the company, worth about US$1 billion when sold, would be offered to foreigners as sale within China would invite what he called further interference from authorities.
No one at the central bank was willing to comment yesterday.
Both Mr Shen and the bank have put themselves in a difficult position.
Chinese and foreign journalists attending the press conference yesterday came away with the impression that there was much more to this story than appeared on the surface.