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    • How might China’s small private firms be paying the price for huge local government debts?
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    How might China’s small private firms be paying the price for huge local government debts?

    Harry Posted on

    Private companies in China in a “precarious” situation Lawyers and observers have warned that debt-ridden local governments are seeking to increase their profits through increasingly harsh criminal law enforcement.
    The latest such case, involving a businessman in eastern Shandong province, has raised new concerns despite warnings from Beijing. repeated commitments Promoting a supportive legal environment for small and medium-sized enterprises (SMEs).

    The businessman owed 230 million yuan (US$32.3 million) for a government-backed construction project in southern Guizhou province. But in September, a Guizhou court charged him with criminal contract fraud and other illegal acts and sentenced him to 19 years in prison.

    Decision complex concerns local authorities resorted to overly harsh legal action targeting businesses elsewhere to ease the situation debt situationPressuring companies to write off government debts or imposing heavy fines to increase coffers.

    The trend towards such cross-regional prosecutions is “intensifying,” according to a Beijing-based legal expert who asked to remain anonymous due to the sensitivity of the issue.

    “Entrepreneurs in China now find themselves in an extremely unstable situation,” triggering a “sense of despair and fear,” the expert said.

    Harry
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