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Bank Meltdown
Special> Global Financial Crisis> Bank Meltdown
UPDATED: October 17, 2008  
Official Says No Massive Bankruptcy in Yangtze River Region

Deputy governor of east China's Zhejiang Province, Chen Min'er, denied rumors that widespread bankruptcy has been occurring in the region.

At a Beijing press conference Thursday he said there were indeed several cases of medium-sized and small businesses going broke but problem is not as severe as what has been reported in local newspapers..

"Such firms are not going out of business in groups," Chen said.

Shanghai Securities News reported in July that a small town -- Xiangshan of Ningbo, Zhejiang -- had more than 100 textile firms, or a fifth of the town's total, shut down by the end of June.

The story was later followed by other reports of widespread bankruptcy in some local newspapers.

There are more than 50,000 large industrial firms with annual sales above five million yuan (about US$735,294) and 785,000 smaller firms, a provincial statistician said in July. Both figures were roughly the same as the same period last year.

More than 1,200 firms were shut down in the first half of this year, the worst record in 10 years, according to statistics from the province's industry and commerce agency.

"Firms in difficulties are mostly small and medium-sized exporters or processing firms," he said.

"External factors have played a role, but these firms also have problems themselves, such as product structures and management efficiency."

Chinese exporters are now in a difficult situation as they struggled against the appreciation of Chinese currency, slackening demands amid a global slowdown and escalating production costs.

No official figure was available for the number of bankrupt firms across the country. But a General Administration of Customs report said on Monday that more than half of the country's toy exporters had been driven out of the market in the first seven months of this year.

Zhejiang was part of the larger Yangtze River region, one of the country's most dynamic regions. The province boasted a robust private sector.

Chen said about 70 percent of the province's total GDP, 60 percent of taxes and 76 percent of the exports were contributed by private companies. In addition, more than 90 percent of the province's new job opportunities were created by these firms.

(China Daily via Xinhua October 17, 2008)


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