Wenzhou expects substantial financial reforms(3)

"You have got the 'the imperial sword' from the country with the approval of a pilot financial reform zone. The key is how you use it," said Zhou.

In fact, even the private lending registration centers faced problems. For example, lenders would worry about their income tax because their capital is put under official monitoring if they choose to lend via the centers.

"On the whole, courage is lacking in financial reforms with slow pace and less significant progress," said Chen Derong, secretary of the Wenzhou municipal committee of the Communist Party of China in December.

Chen vowed to speed up financial reforms and have results on the first anniversary of the founding of the zone and wants big achievements by October.

"In 2013, Wenzhou will help and encourage private enterprises to join the establishment of seven kinds of local financing institutions, such as insurance, stocks and banking companies," said a senior official with the leadership office of Wenzhou Financial Reform Zone.

"We should try to make full use of the flexibility of private funds and the advantage of risk management of professional banks," said the official, who declined to be identified.

The regulation on the private lending market in Wenzhou is expected to come out at the end of the year. Wenzhou will set up more private lending registration centers and private capital management companies this year, the official told Xinhua.

Wenzhou was China's first pilot financial reform zone, followed by similar zones in the Pearl River Delta in Guangdong Province and Quanzhou in Fujian Province.

"Any reform needs time. Under the current monitoring framework of the strictly controlled financing sector, it is imaginable that local governments face great difficulties in pushing forward regional financial reforms," said Chen Jingwei, a financing expert with the Chinese Academy of Social Sciences.

"High-level financing personnel should be introduced and breakthroughs gradually made to make financing services focus on the upgrading of industries," he said.