Wen Jiabao Left Beidaihe and Went to Zhejiang in a Rush.
There’s A Hidden Secret Behind This
Chinese Premier Wen Jiabao left Beidaihe Meeting,
the important event before the 18th National Congress He showed up in Zhejiang on August 14th.
Analyst pointed out the reason why Wen Jiabao went to
Zhejiang is to solve an emergency economic crisis.
Actually the Zhejiang issue is the microcosm of
the whole Chinese economy.
Wen Jiabao is unable to do anything and
will not have a good solution to handle it.
Between August 14th and 15th, the Chinese premier Wen
Jiabao visited many cities in Zhejiang province.
These including Hangzhou, Huzhou, Jiaxing, so he could
investigate the economic operation.
Wen Jiabao emphasized during the investigation: ”We should
be clear that the foundation to stabilize the economy.
It isn’t stable and economic difficulty
may continue for a while.”
The economy system in Zhejiang is based on small and
medium-sized private enterprises.
With support from local governments, Zhejiang’s private
economy is one of the most active and developed in China.
However, China central bank warned to take precautions
against increased non-performing loans which may put the economy system into risk.
At the end of June 2012, the balance of non-performing loans
of the commercial banks was 452.8billion RMB,
which is 28.7Billion more than last year.
The trend of the non-performing loans is increasing.
The non-performing loan ratios of some commercial banks
are increasing too.
In addition, the “Finance" magazine published an article
the balance of the non-performing loans in
Wenzhou city was 18.1billion at the end of June;
the second wave of economy crisis is generating.
Since last September, the corporate debt formed a domino
effect in Wenzhou.
One year later, although part of the crisis has improved,
the aftermath of the debt crisis is still trapped Wenzhou.
At the same time, more and more hidden crises came to
the surface, one after another.
Cheng Xiaonong, a Chinese-American scholar said
the most difficulty that Zhejiang faced is economy crisis.
In 2008, the Chinese Communist Party (CCP) spoke to the
banks lending much money to enterprises which reduced the economy crisis to a low level.
Cheng Xiaonong: “In fact, it created very serious troubles.
Starting from one year ago, the troubles started to show.
Local governments borrowed a lot of money
but couldn’t Return it.
The enterprises borrowed money but spent it on
the real estate market or doing other speculating.
Now the real estate market can’t make profit,
then those enterprises are facing collapse.”
According to the report of “Tencent Finance”, there are nearly
40 entrepreneurs who disappeared from the public
since Huang He, the board chairman of Jiangnan Leather
disappeared in April 2011.
Nearly 20 of them disappeared last September. On the night
of the Mid-Autumn festival, several entrepreneurs fled.
Even the microblogs spread a “Disappeared Wenzhou
Chen Zhifei, an economy professor of the New York City
University thought that under the current Chinese economy,
there is big oppression on the private enterprises.
They used the loans to invest in the real estate in order to
survive but the real estate market suddenly shrank.
Some small entrepreneurs lost the investment in the market,
and couldn’t return the loan and had to flee.
We can see the debts are enormous from the large number of
Wenzhou entrepreneurs who disappeared.
Chen Zhifei: “They were forced to flee. Under the current
real estate market crisis, the contradiction is very sharp.
Banks have no good solution. They can only have stricter
investigations when they release any loan.
This made the surviving environment for the
private enterprises more difficult.”
The Tencent report also pointed out that the civil loan
in Wenzhou is very famous.
Maybe it is the reason that led the entrepreneurs to flee.
But who changed Wenzhou into a city of usury?
Is it because the Wenzhou people are greedy?
Or is it because of the Chinese financial system?
Or is it because of the tightening policy?
We need to know the truth.
Cheng Xiaonong: “The CCP doesn’t want to admit the fact.
Now Wen Jiabao is there to handle the issue,
which he doesn’t want to face. This time, it will not be easy
to handle because it is related to the root of the banks.
The Banks have to tighten up monetary policy to survive,
which is the current situation in Zhejiang.
The Banks tried their best to collect the debt payment,
but the economy will collapse if it pays back the debt.”
Chen Zhifei said in fact, the issues Zhejiang has is the
microcosm of the entire Chinese economy.
Wen Jiabao is unable to do anything even he wants to
solve the issues, and he will not have any good solutions.