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Global Business: Dragon's Den 2

12/05/2012

Dragon's Den 2

BBC World Service - Global Business, Dragon's Den 2

Peter Day reports on private finance in China.

In the second of two reports from China, Peter Day looks at private financing.  Until now a grey area of the financial market but crucial to the growth of their small and medium business enterprises.

In the second of his reports on China's economy, Peter Day reports on the controversial area of private financing.  In a place where there are no official home-grown angel investors or venture capital and where the state owned banks only lend to the state owned companies, funding to build a business is hard to come by.  Many of the small and medium sized manufacturing business that are the backbone of the Chinese economy have relied on private financing … short term loans with high rates of interest to get them started.  The loan money comes from ordinary people who lend it to private financiers for high rates of return on their loans, and it is these high rates of return that are illegal under Chinese law, in fact anything over four times the official interest rate.  Now after a high profile case involving a young woman who was sentenced to death for financial irregularities. Isn't it time the Chinese government did something to regulate this important market.

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