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China: Dirty Money Lending And The Merchants of Wenzhou

Public officials have been caught repeatedly in usury-related scandals in the wealthy southeastern city of Wenzhou. Not only is it a betrayal of public trust, it exposes an economic system that too often relies on illegal money lending.

Wenzhou in southeastern Zhejiang province, People's Republic of China
Wenzhou in southeastern Zhejiang province, People's Republic of China

Worldcrunch *NEWSBITES

Recently, a couple of moneylenders from Wenzhou China ran off with 1.3 billion RMB ($204 million) worth of deposits, 80% from government coffers. The public reaction fell somewhere short of surprise, as two other similar cases this year had already made headlines: in one, the creditor-victims were all employees of Wenzhou's local judiciary system; in the other case, the usurer, who was a top local Communist Party appointee, was later accused of killing his mistress.

That high-ranking officials are involved in usury has become an open secret over the years in Wenzhou Zhejiang, one of the Chinese regions most active in private lending, where 30% of small and medium-sized enterprises (SME) are believed to rely on illicit moneylenders to maintain their cash flow.

The flight of these usurers not only leaves direct victims, it also breaks the flow of funds and can actually slow the entire regional economy. In September, some 80 Wenzhou entrepreneurs either went bankrupt or fled town. There were two suicides last month because of the despair.

But more than the general downturn for entrepreneurs in Wenzhou, public interest has above all focused on the fact that public officials are involved in private lending.

In general terms, officials are not allowed to run a business and hold shares, let alone act as financial sharks. But in reality, the practice is widespread, benefiting from the fact that both usurer and public officials are aiming for high-interest yields. The rule of the game is an exchange of interests. In guaranteeing their creditors high interest from their deposits, the usurers will also demand "convenience" from the officials or even use the credibility of their official positions so as to attract even more depositors. This is tantamount to a disguised form of bribery.

High returns usually involve high risk. So two other factors explain why these bureaucrats take so much risk in depositing private money. One of them is that a lot of their funds come from corruption and therefore must be laundered anyway. The shady nature of the private funds is perfect for hiding black money, while at the same time yielding much better returns than any proper channel.

A recent survey conducted by the All-China Federation of Industry & Commerce reveals that 90% of Chinese SME cannot obtain loans from banks, which prefer to lend to state enterprises. As the monetary condition tightens further, some say that the SME are finding it even more difficult to cope than they did in 2008, when the financial crisis started.

Read the full story in Chinese

Photo - Malcolm M

*Newsbites are digest items, not direct translations

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The Pope's Bronchitis Can't Hide What Truly Ails The Church — Or Whispers Of Succession

It is not only the health of the Pope that worries the Holy See. From the collapse of vocations to the conservative wind in the USA, there are many ills to face.

 Pope Francis reaches over to tough the hands of devotees during his  General Audience at the Vatican.​

November 29, 2023: Pope Francis during his wednesday General Audience at the Vatican.

Evandro Inetti/ZUMA
Gianluigi Nuzzi

ROME — "How am I? I'm fine... I'm still alive, you know? See, I'm not dead!"

With a dose of irony and sarcasm, Pope Francis addressed those who'd paid him a visit this past week as he battled a new lung inflammation, and the antibiotic cycles and extra rest he still must stick with on strict doctors' orders.

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The Pope is dealing with a sensitive respiratory system; the distressed tracheo-bronchial tree can cause asthmatic reactions, with the breathlessness in his speech being the most obvious symptom. Tired eyes and dark circles mark his swollen face. A sense of unease and bewilderment pervades and only diminishes when the doctors restate their optimism about his general state of wellness.

"The pope's ailments? Nothing compared to the health of the Church," quips a priest very close to the Holy Father. "The Church is much worse off, marked by chronic ailments and seasonal illnesses."

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