By IANS,
Beijing : Police in China have launched a crackdown on entrepreneurs who have gone into hiding to avoid repaying bank and informal high-interest loans.
The move has come as part of a move to control the debt crisis in east China from spilling into social unrest, Xinhua quoted officials as saying.
Rao Dawei, a shoe factory owner who employs 60 workers, was the first Wenzhou businessman hunted down by police. The recent debt crisis, precipitated in part by the country’s monetary tightening, has sent shock waves through the city.
According to officials, Rao had fled owing 800,000 yuan ($125,520) to upstream suppliers and 200,000 yuan in employees’ wages. He was held from his home province of Jiangxi Oct 18, four days after he sold off factory equipment. Later, he ran away with his girlfriend.
Rao happens to be one of more than 90 owners of small and medium-sized enterprises (SMEs) in Wenzhou who have disappeared or declared bankruptcy to invalidate debts owed to individual creditors pooled from the informal lending market.
Fearing their wages wouldn’t be paid after their bosses fled, many employees have taken to the streets to protest. They want to prevent indebted bosses fleeing abroad. Many factory bosses are believed to hold foreign passports, said officials.
Private enterprises are a critical part of Zhejiang’s economy, accounting for about 70 percent of GDP and employing 90 percent of the workforce.