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1、ChinaFurtherOpensItsFinancialSectorFORthelasttwoyearsmanybusi-nessownershavebeenfleeingZhejiangProvince’sWenzhou,acitythathasbecomefamousforitsproductionofsmallcommodities.Facingproblemssuchastherisingcostofrawmaterials,manybusinessmenhavebeencrushedbyhugedebts.Wenzhou’sp
2、lightmeansthatprivatemoneyhasnowheretogobutrealestateorspeculationincommoditiessuchascoalandvegetables,whilesmallandmedium-sizedenterprises(SMEs)areshortoffundseventhoughtheyhaveprojectstocomplete.FundingproblemsarisingfromkinksinthefiniancialsystemhavebeendamagingChina’s
3、economichealthforsometime.Thecurrentfinancialsystemisdominatedbystate-ownedbanks,whichprefertolendmoneytobigstate-ownedenterprises,leavingSMEs,mostofwhicharestrugglingtomakeaprofit,outinthecold.Sincethecentralbankbegantighteningthe8moneysupplytwoyearsago,theproblemhasbeen
4、gettingworse.SMEs’shareofloans,thoughgrowing,isapaltry36.8percentbuttheyareresponsiblefor60percentofGDPand77percentofemployment.ItisclearthatthereisahugeimbalancebetweenSMEs’contributiontotheeconomyandtheresourcesavailabletothem.Thissituationisindireneedofchange,andtodoth
5、isitisessentialtoreformthefinancialsystemsoastochannelprivatecapitalintotherealeconomy.AFreerFinancialsectorinneedIn1986,YangJiaxinglaunchedWenzhouLuchengUrbanCreditCooperative,which,asthefirstshareholdingprivatebankinthePeople’sRepublicofChina,brokethemonopolyofstate-run
6、banksinWenzhou.However,inthedecadeafterYangopenedthebank,financialinnovationstagnated.In1995,uponhearingthatthe43privateurbancreditcooperativesandfinancialservicecompanieswouldbemergedintostate-ownedfinancialbodies,Yangcloseddownhisbank.8Sincethen,thecentralgovernmenthasi
7、ntroducedcertainpoliciestoencourageprivatecapitaltoenterthefinancialsector,includingtwosetsofclausesontheprivateeconomyin2005and2010.Anotherstepforwardwasthelegalizationofsmallloancompaniesin2008,butinsufficientmanagementandsupervisionledtothefinancialsectorslidingintoadi
8、sorderasfinancialreformstagnated.Today,state-runbanksstilldominatethedomesticfinancialmarket,hol
