Rising Tension as China Weighs a Double Dip

(Beijing) – Nerves started fraying for a Shanghai property developer named Xue just a few weeks after he scraped together several million yuan from family and friends for a private, high-interest loan to a Wenzhou electrical equipment company.

Xue had expected substantial returns after the borrower agreed to a 30 percent interest rate and signed the loan deal last November. But his optimism started fading fast when interest rates for private loans began to rise, bank credit tightened, and the government introduced new real estate market controls that affected his core business.