China's Wenzhou battles grey-market lending

China’s cradle of entrepreneurism Wenzhou City revealed on Saturday its plans to formalize grey-market loans in a bid to support small companies while cutting the risk of bad loans, Reuters reported, citing state-owned Securities Times. The coastal city’s municipal government unveiled measures to use credit firms as a means to channel private funds into local companies. The credit firms will be able to sell bonds to private parties, while qualified credit companies can apply to become rural banks, trusts or insurance and securities firms, said Zhang Zhenyu, the chief of the municipal government’s finance office. Regulators will adopt stringent standards when assessing companies that seek financial institution status, according to Zhang. The plans come amid a series of bankruptcies in the city last year, resulting in suicides and the disappearances of businessmen unable to meet high-interest repayments on grey-market loans.