Zhejiang private lending disputes on the rise

The number of private lending disputes in east China's Zhejiang province has been on the rise since the global financial crisis in 2008, according to new research by the province's higher court.

Both the number of disputes in Zhejiang, where private businesses serve as a pillar of the prosperous local economy, and the amount of money involved rose very fast over the past few years, according to a report released on Tuesday by the court.

Courts in Zhejiang handled 58,037 private lending disputes involving 28.4 billion yuan (4.5 billion U.S. dollars) in the first half of 2012, up 27 percent and 129.6 percent, respectively, from the same period last year, according to the report.

Over the past few years, private financing disputes accounted for almost half of all commercial lawsuits in Zhejiang, it added.

More than half of 2,835 companies surveyed in Zhejiang last year have sought financial help from private creditors, as banks are typically unwilling to lend to smaller companies.

During last year's credit crunch, about 100 managers or heads of private companies in Wenzhou, a Zhejiang city known as the cradle of China's private businesses, were reported to have disappeared, committed suicide or declared bankruptcy -- invalidating debts worth about 10 billion yuan (1.58 billion U.S. dollars).

In late March, the State Council, China's Cabinet, announced plans to set up a pilot zone in Wenzhou, and later a private lending registration service center was inaugurated to serve as an intermediary between borrowers and lenders in an attempt to standardize private lending in the city.