Reform of the country's private business hub in a bid to curb underground lending is making progress amid challenges and skepticism, Yu Ran reports.

Close-up shots of Zhang Zhenyu on television on Dec 20 showed large beads of sweat running down his face as he gave an account of his past year of work to a critical audience consisting of the city's Party leaders and prominent people.

If he was nervous, he had good reason to be.

Huafon Small-Sum Loan Co Ltd is the largest of such companies in Wenzhou, Zhejiang province. Financial reform launched in China's private business hub is making progress amid challenges and skepticism from critics. [Photo / Xinhua]

As the director of Wenzhou's financial office and the official in charge of financial reform, Zhang oversees the much-touted financial reform that is stumbling in the city.

In the 10 months since the reform was kicked off with great fanfare, little progress has been made in bringing relief to the many thousands of cash-strapped small and medium-sized enterprises that it was meant to help.

Many Wenzhou factory owners, lenders and financial middlemen have all been asking the same question: "What's in it for us?"

Other than the officials responsible for the program, few have found the answer.

As Huang Fajing, vice-president of Wenzhou General Chamber of Commerce, and owner of one of the largest lighter manufacturers in the world, said: "I'm sure financial reform won't do us any harm. But it's not doing us any good either."

To be sure, financial officials in the city under Zhang's direction have established a host of facilities, including several lending platforms, to facilitate an orderly and well-supervised flow of capital to borrowers.

These facilities are supposed to replace the functions of the underground banking system that tipped over the brink early last year.

They include Wenzhou's private lending registration service center, Wenzhou SME (small and medium-sized enterprise) Financing Service Center, a financial reform plaza and two financial development zones.

But these facilities have largely been shunned by lenders and borrowers alike.

According to the latest statistics from Zhang's department, loans made through the private lending center established under the reform program amounted to just 390 million yuan ($62 million).

The majority of borrowers were owners of struggling SMEs with a successful borrowing rate of just 28.17 percent. The total amount of money that registered lenders offered exceeded 1.3 billion yuan but "there were few takers", said Xu Zhiqian, general manager of Wenzhou's private lending registration service center.

Frustrated officials and disinterested private lenders interviewed by China Daily openly complained about bureaucratic inertia, public apathy and widespread suspicion for holding up the progress of the reforms.

"Nobody seems to have a clear idea of the general direction, and nobody is in any hurry to make any commitment," Huang said.

But not everyone shared his mood.

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