Because the Chinese government has tightened credit policies, small businesses are relying more on private moneylenders, media reports have noted. The problem has become notable in the city of Wenzhou, in the prosperous Zhejiang province, one of the first cities to develop a private sector economy in the wake of the country’s 1978 economic reforms. One of the big questions is how far the problems experienced in Wenzhou are indicative of a generalized funding crisis in China.

Commenting on this phenomenon, Joe Fuller, a co-founder of Monitor Group, the global management consultancy, told China Daily that the absence of legitimate or regulated private lending to small- and medium-sized companies is a big threat to China's future growth if the SMEs cannot get financing to develop their businesses.