Wenzhou, a city in southeastern Zhejiang province, has been a prosperous foreign trading port since early 19th century. Its citizens have migrated all over the world and small and medium size enterprises (SMEs) have been flourishing in the city since the Deng Xiaoping's open door policy in the 1970s. The term “Wenzhou model” has been used to describe the unregulated free market economic development in the region.
Recently a scandal broke out surrounding Wenzhou government officials who were involved in illegal loan sharking activities; it is estimated that billions of RMB have been trafficked out from banks in the city to the underground loan market and onto local SMEs.
Luggage factory, Wenzhou, China. Image by Malcolm M on Flickr (CC BY 2.0).
However, as a result of the economic downturn, the companies have been unable to pay the debt. So far more than 26 Wenzhou entrepreneurs have fled [zh] the country and the local government is pleading with the central government for help. In the past few days, ‘runaway bosses’ has become a trending term on various social media sites and many believe that Wenzhou bosses do not deserve any sympathy.
Young entrepreneur Song Zude comments [zh] on the situation on the Sina Weibo forum:
The property speculators in Wenzhou do not deserve any sympathy. The major reason for high property prices is government's policy in lifting the land prices and chasing after GDP, at the same time, the property speculators in Wenzhou should also be responsible. In the past decade, Wenzhou people have been lifting property prices all over the country, disrupting the local property market and creating suffering for local residents. Many Wenzhou bosses are not focused on their businesses, they are involved in property speculation, the virtual economy, loan sharking activities and now in serious debts. “Runaway Wenzhou people” are all over the world, now it is time for them to pay back.
There are more than 300 comments in Song's discussion thread, many expressing their anger towards Wenzhou speculators:
-浩米- 温州炒房，潮州炒地，银行炒息，房都没买，先比人轮奸一轮！(今天 09:39)
-浩米-: Wenzhou speculates on property, Chaozhou speculates on land, banks make their profit on interest. For those who do not have property, they have to go through all these gang rapes first.
dengdaiyanguilai 就是啊！现在政府要救他们，那他们以前把全国人民的钱都挣完了，现在要救 ，以前的钱他们退、吐出来吗？ (今天 08:03)
dengdaiyanguilai: That's right. They have extracted all our money, can they return all our money before the government helps them out?
靖江枫 温州籍老板们，国家受自然灾害袭击时你们在干什么？你们喝着拉菲红酒，开的是豪华跑车，抱的美女明星，而大部分钞票都靠投机倒把得来，被高利贷逼走的人有几个没参与这些勾当？(今天 03:15)
靖江枫: Wenzhou bosses, what were you doing when the country was suffering from natural disaster? You were drinking Lafite [an expensive French red wine], driving luxurious vehicles, hugging beautiful movie stars. For those who earn their money through speculation and are forced to runaway haven't engaged in the above mentioned activities?
丹东晓程: The doomsday of Wenzhou property speculators is a happy day for the poor rural villagers.
本莫愁 炒高国内的，又跑去迪拜炒！结果赶上迪拜房地产业大跌，好多人栽里头！温八子们，拿着在国内炒房赚的钱，全跑国外去给人送钱，真害人不浅！(10月5日 14:59)
本莫愁: They have pushed up the property prices in the mainland then transferred their capital to Dubai. In the end the property price in Dubai fell and many have buried themselves there. The eight richest in Wenzhou, they have given the money they earned in China to foreigners!
VanTssei 既然ZF创造了一个能叫你稳赚的垄断市场，有资本为什么不赚？本来炒房团就是ZF为了有房市资金介入而鼓励下的产物，炒房先驱而已。真心的，祖德就时事针砭时弊和对娱乐圈冷嘲热讽就算了，别扯太多你的副业。(10月5日 14:44)
VanTssei: Since the government has created a sure win monopolized market, it is natural for those who have capital to make money. Property speculation has been encouraged by the government, Wenzhou people are just taking the lead in this. Zude should focus on commenting on entertainment business, economics is not your field of expertise.
State-run media, Chinese Central Television's finance commentator Niu Wenxin disagrees with the public sentiment and blames the United States (US) [zh] for the problem:
When China can no longer continue its tight monetary policy, the US forces RMB to increase in value. What does it mean? The increase in RMB's value is equal to a tight monetary policy. Let's take a look in Wenzhou – it is the consequence of the tight monetary policy. However, some people try to blur the issue by saying the problem of Wenzhou is caused by Wenzhou bosses’ speculation activities and greed. This will lead to bringing the Chinese economy down.
In Niu's discussion thread:
poliwang 现在世界经济增长在放缓，国际大宗商品价格连续暴跌，中国的出口将会面临严峻的冲击，中国如果不马上停止紧缩政策而转向刺激内需，中国经济很可能出现200年时的断崖式滑坡和硬着陆！我们现在首要的问题是要多创造就业，避免出现中小企业大规模倒闭和大量的失业！ (10月5日 07:55)
poliwang: The economic growth in the whole world is now slowing down. The price of many commodities are trembling down. Our export [market] is facing a critical situation. If China does not stop the tight monetary policy and stimulate internal demand, we will face a hard landing. Currently we have to create more jobs and prevent SMEs from shutting down and unemployment.
清蒸_小老虎 温州地下金融资金链断裂的根源其实是金融系统的低效和利率的扭曲。再加上腐败和无效监管，于是形成了事实上的庞氏骗局，最终必然走向崩盘。信贷紧缩只是提早刺破了这个泡泡。毕竟当全民放贷开始出现时，我们应该知道离盛宴结束已经不远了。(10月5日 00:38)
清蒸_小老虎: The broken underground financial chain is the result of the twisted interest rate and the ineffectiveness of the current finance system. In addition, the corruption and lack of regulation has created a de facto fraud and will eventually collapse. The tightening of the loan just squeezes the existing bubble to burst out. When loan sharking activities start emerging all over the country, we know the prosperous time is near the end.
see also http://chovanec.wordpress.com/2011/10/03/economy-on-the-edge-of-a-nervous-breakdown/