Opinion | Wenzhou punters cautious over property bets in Shanghai free-trade zone

Wenzhou residents have a reputation as bold punters, but prefer number-crunching to nervy bets these days.

The city in southeastern Zhejiang province was long a hub for the underground banking system before its spectacular collapse in 2011.

During the export boom days leading up to the crisis, black market lenders helped small manufacturers keep cash flows steady, and pocketed big gains on eye-watering interest rates. But when the economy turned, company failures mounted in Wenzhou, a city of about nine million, triggering a round of suicides. Some businesses were paying as much as 7 per cent interest a month to loan sharks in an effort to stay afloat.

In the aftermath, Beijing moved to reform the city's financial underpinnings. Last Saturday, the city formally adopted new rules for private lending, in a bid to ease small companies' access to credit. But it remains to be seen whether they are willing to turn to regulated lenders.

Meanwhile, residents who survived the financial turbulence are sitting on an estimated 700 billion yuan (HK$886 billion), and some punters have turned their gaze to Shanghai.

When the free-trade zone was launched last September, the media carried reports about Wenzhou speculators descending on the area or neighbouring strips and snapping up retail spaces, betting big on soaring price increases.