Tue, Oct 18, 2011 - Page 11 News List

Academic warns on PRC debt fleeing

Staff Writer, with CNA, BEIJING

The Chinese authorities should deal cautiously with the issue of a large number of company bosses in Wenzhou, Zhejiang Province, who have reportedly been fleeing their debts recently, a Taiwanese academic said in Beijing yesterday.

Shia Ben-chang (謝邦昌), a professor at Fu Jen Catholic University, was referring to Chinese media reports that many Wenzhou businesses are heavily in debt because of speculation in the real-estate, stock and futures markets and that a housing-market slump has dealt them a heavy blow.

Hsieh said the reports underscore that small and medium-sized enterprises in China are strapped for cash.

Hsieh made the remarks as Fu Jen, Beijing’s Capital University of Economics and Business, City University of Hong Kong and Macau University of Science and Technology unveiled a consumer confidence index for Taiwan, China, Hong Kong and Macau.

Hsieh said the fates of the Wenzhou entrepreneurs are related to a cash crunch, as well as the poor economic situations in Europe and the US.

This is why places with many small enterprises can expect to have the same problem as Wenzhou, he said.

“As Wenzhou businessmen are omnipotent, the Chinese authorities have to address the issue squarely or it could spread,” he said.

In addition, many people are employed by businesses in Wenzhou and the effect on society of these businesses suddenly shutting up shop should not be overlooked, he said.

The annual increase in China’s consumer price index is more than 6 percent, Hsieh said, adding that this, coupled with the steady appreciation of the yuan, would hurt efforts to curb inflation.

In contrast, Taiwan’s CPI annual increase is less than 2 percent, he said.

However, China’s efforts to cool its housing market have borne fruit, while Taiwan’s measures have been less effective, he said.

Capital University professor Liu Yang (劉揚) said China’s inflation is affected by the global situation as well as rising incomes in China, and it will take time before it slows down.

She said she was confident the Chinese government would be able to control the situation

“The possibility that the problem of absconding Wenzhou businesspeople could spread, or evolve into a financial crisis, is minimal,” she said.

Chinese Premier Wen Jiabao (溫家寶) recently unveiled measures to support cash-strapped small enterprises.

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