| China’s rising economy in recent years has resulted in a growing number of cases wherevarious private financing disputes and illegal financing activities are involved. The roots ofthe problems are stemmed from the grey area of legal regulations on the informal financingmarket. And the Wenzhou credit crisis which broke out in2011becomes the best footnote tothe legal system of private financing for China’s SMEs which needs urgently to improve.Because of the lack of a dedicated SME private finance law, the legal system constituted by aseries of provisions is imperfect and has some conflicting provisions. Meanwhile, manydeveloped countries have a more perfect legal system. Such as the management of thefinancing in USA, or the PFI(Private finance initiative) in UK, etc. In this paper, the XintaiGroup’s debt crisis will be taken as an example to analyze the problems in the privatefinancing activities of China’s SMEs.If government wants to solve the problems by law, the first thing is defining the concept ofthe private financing in law. But the current situation is; the size of private financing activitieskeeps increasing, while the government’s policy is still conservative, and the government triesto suppress the running of private capital through the policies. These are harmful to socialeconomic. So we should absorb their strengths, then take the financing guarantee serviceagencies and credit guarantee system as the core of legal system of private financing. As aresult, the huge amount of private capital will be able to find some reasonable and legitimate investment channels. Our constitution provisions that: the non-public economic should beencouraged and guided to develop. Therefore, the government must not only establish a soundlegal system, but also should change its concept of governance. And its regulatory functionsshould be play down too. Relying on a sound legal system, we will build a perfect legalsystem of private financing for China’s SMEs. |
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