Credit cooperative busted in China for criticism of Beijing

Police in northern China have confiscated three million yuan in cash (US$360,000) and frozen the bank accounts of one of the nation's biggest private companies, after the company tried to set up an independent credit cooperative, officials said yesterday.

The police also shut down the Web site of the Dawu Group after owner Sun Dawu posted essays critical of China's rural policies and slammed the state's loss-making banking industry, and took away mounds of company documents.

"It all started on May 27, when the police came and started interrogating people," an official at the company's secretariat said.

"This is an economic issue, Sun Dawu is hoping to set up an independent agricultural credit cooperative," the official said.

The police investigation apparently began after Sun withdrew the cash from a state-owned bank, the official indicated, while refusing to go into specifics.

The company was also fined 15,000 yuan and forced to shut down its Web site for six months because of the anti-government content on the site, she said.

Other company officials, including Sun, were not immediately available for comment.

The Dawu Group, a feed and agricultural company located in Xushui county, Hebei province, some 80km southwest of Beijing, has been one of the biggest private companies in China since 1995, according to the Commerce and Industry Bureau.

Sun and his wife have been viewed as local economic miracle workers, building the company from a few chickens and pigs in 1985 to one of north China's most successful agricultural enterprises.

Sun has been a vocal champion of badly-needed reforms in China's impoverished rural sector and demanded greater freedoms for farmers to speak out and organize in an effort to protect and develop their economic interests.

Officials at the county government and public security bureau did not deny that Sun was under investigation, but refused comment on the case.

In a recent article on his Web site, Sun was especially critical of how state-owned banks funnel vast saving deposits -- largely made up of the savings of China's 800 million rural residents -- into projects in big urban centers, while neglecting rural investment.

State banks are a sensitive issue in China as a run on desposits by rural savers could deal the banks a crippling blow.