China's Business Suicides

There is an amazing article in today's Wall Street Journal, Opinion  [http://online.wsj.com/articles/chinas-unhappy-rich-1410889484?cb=logged0.3363214428536594 ] about suicide among some of China's business owners. Among the claims, "Last year more than 80 businessmen committed suicide in a six-month period in the city of Wenzhou alone."  I couldn't imagine such a thing happening, so did a little research.

Suicide from all causes in the U.S. is 6.4 per 100,000.  China's suicide rate is 13.9, which is based on data from 1999, so not very current.  Sources say it is higher, but still below Japan and South Korea.  

The Wall Street Journal article, indicates the suicides are caused by investigations into a new type of crime, being rich.

In a research paper done by a graduate student in Shanghai [ http://www.ceibs.edu/images/bmt/research/2012/02/08/216B3FA4023AC36C1799AC8D92E08914.pdf ]  it is tied to the loan rates in that area, parts of which are generated by off-book loans by the rich to those who aren't, the so-called shadow loan, which amounts to about 25% of existing loans and can be made by individuals or banks.  The state-run banks are right in the middle of this.  Being rich is not the main criteria for making these loans.

As the economy drew down (and it is), these people found it hard to pay the loans back.  A simple, but effective, way out of that mess is characterized on the first page of his paper - a man jumping from the top of a building (they are also jumping out into traffic which I hope does not catch on around here).

News China [http://www.newschinamag.com/magazine/when-wenzhou-sneezes]  has an interesting side effect to the loans, telling of a creditor who kidnapped his customer's daughter.  He offered himself up instead, getting her back, but no story of what happened after that.  But,  they did add the following:  On Oct 4, Premier Wen Jiabao made a trip to Wenzhou to investigate the seriousness of the situation... the State Council announced tax breaks and loans for small companies and "Border checks have been stepped up in Zhejiang to prevent any more businesspeople from fleeing abroad to escape bad debts."

Things are bad everywhere.