Xinhua News Agency

Wenzhou shows way with financial reforms

PUBLISHED : Thursday, 29 March, 2012, 12:00am
UPDATED : Thursday, 11 June, 2015, 4:12pm

Beijing said yesterday it would legalise Wenzhou's controversial underground banking sector and allow the city's residents to make direct investments abroad.

The two decisions represent significant steps in liberalising banking and investment on the mainland, observers said. Hong Kong could benefit from the investment scheme since the city is often the first choice of mainlanders who want to take money abroad.

At a work conference chaired by Premier Wen Jiabao yesterday, the State Council granted Wenzhou - plagued by a series of scandals involving illegal private lending last year - the status of a 'special financial zone', according to Xinhua.

This effectively launches a long-expected reform of the Zhejiang city's financial sector.

The decision comes as Wu Ying, a businesswoman sentenced to death for 'raising funds with intention to defraud', awaits a review of her sentence by the nation's Supreme Court. Her case has drawn unprecedented calls for mercy.

Wenzhou will have to formulate rules to regulate the formerly illegal private fund-raising operations.

Many observers credit the underground banks with helping cash-strapped small businesses thrive in the city, long known for the vibrancy of its privately owned enterprises.

'The policies in the making will by all means have far-reaching significance, since it is a clear sign that the central government has decided to push forward with the plan to legalise private banks,' said Chen Jiali, chief of the Wenzhou division of the Zheshang Research Association.

Xinhua also confirmed a Post report yesterday that Wenzhou residents would be given direct access to foreign properties and production facilities, at a time when affluence is rising on the mainland.