Thousands of Chinese savers like Fan who entrusted money to an informal finance industry that operates with little government oversight are suffering painful losses as borrowers default and real estate and other ventures fail. Beijing allowed underground finance to flourish over the past decade to support entrepreneurs who generate jobs and wealth but get little credit from state banks. Communist leaders reaped the benefits of a thriving private sector without tackling the political challenge of giving entrepreneurs more access to an official financial system supports government companies. Now, as losses rise, Beijing faces political tension and pressure to help investors recover their money.
1 comment:
China, where bankrupting a large business while lining your own pockets leads to firing squads, not bailouts.
(I think we could learn something from them here)
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