DEBT in China can be life-threatening. Walking around the factory floor of his father’s company, a manufacturer of small electrical parts, Fan Lele looks relaxed these days. Five years ago, he could not come near it. After a few investments went bad, he found himself 10m yuan ($1.5m) in arrears to his creditors, many of whom were former friends. Mr Fan feared they might hurt or even kill him, so he went into hiding for months, skipping from city to city. Eventually, his father dug deep to pay them off. He secured Mr Fan’s safe return and managed, barely, to keep his company afloat.
In this eastern city, home to some of China’s boldest risk-takers, such tales are almost banal. Virtually everyone in business in Wenzhou, which is to say almost everyone in Wenzhou, has a horror story about the financial crisis that struck in mid-2011. Dozens of investors, big and small, fled their debts. The most desperate jumped off buildings. Large, unlicensed underground banks collapsed, as did hundreds of firms. By official (very conservative) reckoning property prices fell some 25% over the next few years (see chart).
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