Wenzhou, a city of about 9 million on China's southeastern coast, accounts for less than 1 percent of the country's economic output, it has an outsized impact on China's manufacturing and its financial markets.
Almost all Wenzhou's business is privately owned, much of it by the city's more than 400,000 small and medium-size enterprises. The city's tycoons hold an estimated 800 billion yuan ($126 billion) in private capital and are renowned for driving speculation in property, coal mining and other commodities.
Much of the estimated 500 billion yuan ($79 billion) in private borrowing in Wenzhou went not to manufacturing, but instead to potentially higher return investments in property or commodities — or to still more lending by the borrowers themselves.
Some borrowers have skipped town...Some of the tycoons that skipped town, including Hu Fulin, owner of major eyeglass maker Zhejiang Center Group, were convinced or coerced into coming back. A few committed suicide.
Behind Wenzhou's woes lie a wider problem in China: many with capital to invest are no longer looking to manufacturing, when real estate, speculating in commodities such as Pu Er tea and high interest lending can offer much better returns
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