Convoluted listing procedures have prompted the city to submit a proposal for its own stock market The southeastern city of Wenzhou, with private capital of 270 billion yuan but not a single listed private company, wants to set up a stock market to enable its people, flush with cash but short of things to spend it on, to buy shares. A city government official said yesterday a submission calling for the establishment of a stock exchange had been handed to the central government during the National People's Congress, which closed at the weekend. He said that the city, in Zhejiang province, had many companies which were suitable for a listing but had given up hope because of the long waiting time and lack of approvals. In addition, the city has dozens of smaller companies that do not meet the requirements to list on China's two main exchanges but would attract capital from city investors. The city submitted the proposal after reading a document on capital markets issued by the State Council on January 31. While not specifically advocating local stock exchanges, it said that it was an important strategy to speeding the development of capital markets. 'This is good for accelerating the development of the private economy, for raising the proportion of direct financing, improving the structure of the financial market and preserving financial security,' the document said. A China Securities Regulatory Commission (CSRC) spokesman declined to comment on Wenzhou's proposal. Wenzhou is one of the richest cities in China, with 187.6 billion yuan in bank deposits and 90 billion yuan in cash in private hands. It produces 20 per cent of China's shoes, 80 per cent of its spectacles, 60 per cent of its razors and 65 per cent of its electric transformers and 70 per cent of the world's cigarette lighters. The private sector accounts for 96 per cent of the city's industrial output and 95 per cent of its exports. But its only listed firm, on the Shanghai exchange, is Zhejiang Dongri, which is state owned. This is a result of the CSRC bias towards state companies. The official said that several private companies had spent millions of yuan on the listing process but none had been successful. 'So the firms that wanted to list have lost interest or abandoned hope of going to the market.' If just 5 per cent of the city's private savings, or 140 billion yuan, went in to buying shares and each company raised 100 million yuan, that would enable 140 companies to list, he said. Over the next five years, about 600 firms would be able to raise money. Nan Cunhui, chairman of the Zhengtai Group, one of Wenzhou's biggest conglomerates, said that lack of capital was a bottleneck to the growth of private companies. 'State banks do not provide sufficient support to private firms, especially small and medium-size ones. The lack of legal channels of capital promotes underground money markets. We should open the local capital market,' he said. The lack of local listed companies is why just 1 per cent of Wenzhou's population have stock trading accounts, far below the level of neighbouring cities like Hangzhou, Ningpo and Jinhua, and why Wenzhou people are becoming China's biggest property speculators.