Police on trail of missing bosses
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Xinhua, October 26, 2011
Police have begun arresting entrepreneurs who went into hiding to avoid repaying bank and informal high-interest loans, as authorities move to prevent the debt crisis in east China from turning into social unrest, local officials said yesterday.
Rao Dawei, a shoe factory owner who employs 60 workers, was the first businessman to be apprehended by police in Wenzhou in Zhejiang Province. The recent debt crisis, precipitated in part by the country's monetary tightening policies, has sent shock waves through the city.
Officials claim Rao fled owing 800,000 yuan to suppliers and 200,000 yuan in employees' wages. He was apprehended in his home province of Jiangxi on October 18, four days after he sold factory equipment and secretly ran away with his girlfriend, according to police.
Since April, more than 90 bosses of private company in Wenzhou were reported to have disappeared, committed suicide or declared bankruptcy - invalidating debts of about 10 billion yuan (US$1.57 billion) owed to banks and individual creditors pooled from the informal lending market.
Taken to streets
Fearing their wages wouldn't be paid after their bosses fled, employees have taken to the streets to protest. The Wenzhou government paid wages to defuse the protest, officials said, adding that they are also trying to prevent indebted bosses from fleeing abroad.
The government of Wenzhou said it has doubled the size of an emergency fund to cover delayed wages to over 10 million yuan.
Private enterprises are a critical part of Zhejiang's economy - accounting for 70 percent of its gross domestic product and employing 90 percent of its workforce.
The State Council has cut taxes and ordered state-owned banks to create easier access to credit for cash-strapped SMEs in Wenzhou, following Premier Wen Jiabao's tour of the city on October 5.
Meanwhile, a top Zhejiang official has said the debt crisis will not affect the province's business environment.
Zhao Hongzhu, chief of the Zhejiang provincial committee of the Communist Party of China, said ahead of a business forum yesterday that output of the province's manufacturing sector grew 21.9 percent in the first nine months, with profits up 33.5 percent from a year earlier.
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