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Head of court calls for new private lending laws

THE head of a court that has upheld the death sentence of Wu Ying, a once hugely wealthy businesswoman who was convicted of fund raising fraud, urged China's legislature to draft laws on the country's flourishing but less regulated private lending sector.

Qi qi, head of the Zhejiang Provincial High People's Court, has submitted proposals to define the concept of private lending, and to confirm the legitimacy of fund-transfer among companies, he told reporters on the sidelines of the annual session of China's legislature in Beijing during the weekend.

"Less than 10 percent of loans from state-owned banks are given to private companies," Qi said. "To legalize private lending is to pump the underground money to water the most thirsty section of the economy."

He said that legalizing direct borrowing among companies will help clarify the boundary of private lending, which is currently gray and sometimes fuels fund-raising fraud.

He also suggested lifting the ceiling of legal interest rates for lending, which is currently four times the benchmark rate set by the central bank.

Last year, courts in China heard a combined 608,477 cases concerning private lending, nearly 40 percent more from a year earlier, Qi said. A total 114.3 billion yuan was involved in the disputes.

The high court under his leadership has in January upheld the death sentence of Wu Ying, who was accused for using hundreds of millions of yuan borrowed from acquaintances for luxury purposes instead of business. The death penalty is awaiting review from China's supreme court.

Web link: http://www.shanghaidaily.com/nsp/Business/2012/03/12/Head%2Bof%2Bcourt%2Bcalls%2Bfor%2Bnew%2Bprivate%2Blending

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