Why did this Chinese city name and shame debtors in a newspaper ad?

Wuhan's finance bureau says more than 250 entities owe the local government millions

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Photo: Wikimedia Commons

BS Web Team New Delhi

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The finance bureau of Wuhan, the Chinese city where the Coronavirus was first detected, has publicly asked more than 250 firms to repay the debt owed to the government, according to a report published in the South China Morning Post.

On Friday, a list providing the details on the debts of 259 entities as of December 2018, including some state-owned enterprises, was released by the Wuhan Municipal Bureau of Finance,

The list, published in the Yangtze River Daily, shows the debts mounted to about 300 million yuan ($42.4 million) and ranged from 10,000 yuan to more than 23 million yuan.

The finance bureau's unusual public action is a sign of the growing financial distress that local governments face. This is partly due to the fact that the zero-Covid policy has led to a decline in economic activity over the past three years.

In Wuhan, municipal revenue declined 8.5 per cent year-on-year in the first quarter, according to data released by the city's finance regulator.

The bureau's list of debtors includes state-owned and private enterprises, finance bureaus, and research institutes. The list was topped by a car manufacturer, owing 23.54 million yuan, followed by a firm that owed 20 million yuan.

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District finance bureaus in the city owed money ranging from 500,000 yuan to 12.52 million yuan, with the bureau in Jiangxia district owing the most.

The municipal finance regulator manages the city's revenue and oversight. The regulator jointly published the list with state-owned Wuhan Yangtze River Asset Management, tasked with handling debt-related matters. The regulator and the asset management firm said they tried various ways to notify the debtors and collect the payments, but "the debtors and guarantors mentioned below have still not paid their debts to the municipal bureau of finance".

"Each of the debtors and the corresponding guarantors listed below and the successors of the debtors and guarantors are requested to fulfil their relevant statutory debt repayment obligation to Wuhan Yangtze River Asset Management immediately from the date of announcement," the statement said.

China has attempted to resurrect the economy after it ditched its zero-Covid policy late last year, but the recovery has been unbalanced, particularly in the private and manufacturing sectors.

The economic indicators for April show that the economy is facing headwinds and that growth may continue to slow in the coming months.

Profits at China's industrial companies for the first four months declined 20.6 per cent from a year earlier, while profits in April rose 3.7 per cent, data published by the National Bureau of Statistics shows.

First Published: May 29 2023 | 12:30 PM IST

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