train of shadows Out,of,the,shadows

　　Wu Ying’s rise to riches was like a Horatio Alger story on steroids. A native of Zhejiang province, Wu dropped out of college to work in a beauty salon, then later opened her own salon down the street. By 2006, at the age of 25, Wu had built a conglomerate of hotels and other businesses and had accumulated assets of US$569.4 million, making her the nation’s sixth-richest woman, according to the Hurun Report.
　　But then the success story went wrong. The police arrested her in 2007, confiscating more than 100 luxury apartments and dozens of cars and businesses. Her alleged crime was financial fraud: Wu had raised US$112 million from 11 people by promising outsized returns. She was sentenced to death in 2009, and China’s supreme court is now preparing to review her case.
　　Wu’s harsh sentence triggered an uproar. For many, it hammered home the realization that China cannot continue to allow the informal lending sector to operate in a state of quasi-legitimacy. Soliciting the public for funding, as the prosecution argues Wu has done, is illegal. However, it has become so commonplace as to seem tacitly approved.
　　Regulators have repeatedly called on China’s state-owned banks to increase their lending to the private sector, but banks remain risk averse; they continue to prefer lending to well-connected, government-supported enterprises. So a vast network of small firms, rich individuals and loan sharks has stepped in to provide the unregulated and sometimes illegal loans that support China’s private sector. While there is no official data on the extent of informal lending, UBS estimates the sector may be US$316-632 billion, equivalent to nearly one-tenth of the country’s GDP last year.
　　Informal lending is especially common in Zhejiang, where it has aided in the emergence of a vibrant private sector. Chen Jun, vice-chairman of the Zhejiang Chamber of Commerce in Beijing, wrote on his microblog that if authorities want to pursue more cases of illegal lending they “can point a machine gun anywhere in Zhejiang and go on rampaging. I can guarantee that every single person who gets shot will be a lender.”
　　Top leaders have acknowledged that informal lending should be brought into the fold. At a press conference at the National People’s Congress in March, Premier Wen Jiabao answered a question about Wu Ying’s case by saying that China should “guide and permit informal capital into the financial arena, standardizing it and bringing it into the open, encouraging its development and strengthening its supervision.” Wen added that the Chinese central bank and the China Banking Regulatory Commission are considering launching trial reforms for the informal lending sector in Zhejiang.