Opinion | The plight of Wenzhou's reform project could determine the nation's future

Wenzhou has been implementing financial reform for just one year, but its progress is attracting attention.

The State Council decided last year to set up this pilot region for comprehensive financial reform, with the aim of accumulating experience for the country.

Wenzhou launched 78 projects to reform its financial organisations, service sector, regulatory system and capital market. Some achievements have been made, resulting in the formation of some small financial companies, rural banks, private lending centres, and a property rights trading market. In particular, the Wenzhou Index, compiled to gauge the activeness and prices of the local private financial market, has gained recognition.

However, experts remain cautious about the effectiveness of the reform, while the local business sector has yet to feel any changes. During the National People's Congress and the Chinese People's Political Consultative Conference sessions this year, the mayor of Wenzhou admitted that the reform had fallen short in three ways. First, progress had failed to meet public expectations; second, the service sector had failed to fulfil the needs of small and medium-sized enterprises; and third, the regulatory system could not effectively monitor private lending activities.

Some scholars pointed out that Wenzhou, as a financial reform pilot region, does not even have a private bank, while neighbouring Taizhou already has three.

In short, the results of Wenzhou's reform have not been satisfactory. A top-level design for reform is needed. When the reform process began, goals were set by the central government to build a diversified financial system to align with economic and social development, which reflected the project's ambition.