Wenzhou set to unveil detailed financial plan

Wenzhou, a city in Zhejiang province, will release details to the public about a test project to reform its financial industry and is rolling out plans to make financial services the city's chief industry by 2015.

The National Business Daily obtained the news at a meeting that Wenzhou Mayor Chen Jinbiao led on Thursday.

The report said the plan will list 12 main points, an arrangement reminiscent of the 12-point decision Premier Wen Jiabao announced last week, saying that Wenzhou will be made into a test zone for financial reforms.

The plan will call for Wenzhou to contain at least 30 rural financial institutions by the end of 2013. Those should include village banks, rural financial co-operatives and 100 micro-credit companies with 40 billion yuan ($6.35 billion) in net assets. This year alone, the city is to add 30 micro-credit companies, which extend very small loans.

Meanwhile, six private asset management companies are to be set up by the end of this year and a private equity fund, led by the city government, is to raise 3 billion yuan by 2015.

The plan will also call for a depository and clearing company to offer aid in private fundraising, which is fairly common in Wenzhou, a city with a long tradition of entrepreneurship.

The company will have 6 million yuan in registered capital and 22 investors, both individual and institutional.

Wenzhou won Beijing's approval on Wednesday for a landmark project that will allow residents of the coastal city to make investments overseas and establish loan companies, among other things.

In bringing private money into the official banking system, Beijing is hoping that cash-starved small businesses, which play a large role in supporting employment in China, will be able to obtain financing more easily and cheaply. Premier Wen said earlier this week that the reforms are also aimed at breaking the monopoly enjoyed by State-owned banks.

Beijing asked the Zhejiang provincial government to set up a working group to take a leading role in the reforms.

Wenzhou's plan said the city will set up a consulting committee that will hire economists to provide advice about the reforms.

The plan, meanwhile, makes no mention of interest rate liberalization. Many economists have called recently for China to let interest rates be set by the market, saying that will make the country's financial system more efficient.

Beijing now controls China's interest rates by setting a ceiling on deposit rates and a floor on lending rates. That protects banks from competition and ensures they have comfortable interest-rate margins.