Financial reform needs new laws
Instead of apologizing for the rough ride from the airport to the hotel, the taxi driver said his town may not have the best roads, bridges and tunnels in the country, but "we built them all with our own money".
In fact, Wenzhou has built quite a bit more than that. As the hotbed of entrepreneurship on the mainland, Wenzhou's private sector has created an almost self-contained economic ecosystem that has brought great wealth to the city.
An astute visitor can get a glimpse of the town's prosperity through the many dealerships for luxury cars, such as Rolls-Royce, Bentley, Mercedes and, of course, Ferrari and Porsche, and the boutiques of high-fashion brands from France, Italy and Spain.
But even this citadel of enterprising merchants and their hardy workers could not hold off the onslaught of the global economic recession, which greatly depressed the demand for the wide range of consumer goods that were churned out by the billions in the many thousands of big and small Wenzhou factories. The slow drying up of export income tipped the balance of the city's ecosystem and touched off a localized, but severe, financial crisis.
Although many Wenzhou entrepreneurs could feel the hurt, they have remained confident that, given time, the system they created can regain its equilibrium. But the painful adjustment process, involving hundreds of failed businesses, billions of yuan in soured debt and many thousands of unpaid workers, has brought into question the validity and sustainability of the Wenzhou economic model.
Such doubts apparently brought the authorities around to the view that there was a pressing need for reform aimed at establishing an orderly and a properly supervised money market to replace the estimated 300 billion yuan ($48.13 billion) underground banking system, where a handshake is as good as a loan document and personal relations take precedence over due diligence. But the financial reform that was kicked off with great fanfare in March 2012 has made little traction.
