Wenzhou Bad Loan Ratio Declines, Ending 17-Month Rising Streak

The non-performing loan ratio at banks in Wenzhou, the eastern Chinese city hit hardest by the collapse of private lending, dropped for the first time since June 2011, the Oriental Morning Post reported.

The ratio fell to 3.43 percent at the end of November, down 0.01 percentage point from a month earlier, the newspaper said, citing data from the local banking regulator. Still, the total amount of soured debt climbed to 24 billion yuan in November, an increase of 87 million yuan from October and up 15.3 billion yuan from the beginning of the year, the report said.

In Wenzhou, an export hub where almost 90 percent of families have taken part in underground lending, more than 100 people fled, committed suicide or declared bankruptcy from August 2011 through last May, and at least 800 lending brokers went bankrupt, Xinhua News Agency reported.

The city’s economy expanded 5.7 percent in the first nine months last year, compared with the nation’s 7.7 percent, according to official data. The State Council, China’s cabinet, announced a trial plan in March aimed at easing funding for small companies and monitoring underground loans.

To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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