Informal lending is rampant in China. Although some private banks like Min-. sheng do lend to small enterprises, the official banks that dominate Chinese banking prefer to lend to well-connected state firms. Many Chinese entrepreneurs have been forced to turn to shadow banks. Using the black market can be hazardous. The country's Supreme Court is, for instance, currently considering the death-penalty case of Wu Ying, a businesswoman accused of illegal fund-raising. Meanwhile, a credit crunch last year that led to numerous defaults in Zhejiang, a coastal province known for its entrepre-neurialism, has brought home the financial risks.
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