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May 22, 2012

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Wenzhou taps individual investments

WENZHOU is planning to allow individuals to invest in the city's light rail construction as part of the city's trial to reform private lending.

The city in Zhejiang Province is planning to raise half of the funds needed for the rail construction by selling bonds to residents at an annual yield of 6.68 percent, Shanghai Evening News said yesterday.

"The fundraising plan may be approved this month," the newspaper quoted a source as saying. "As it's not profitable to simply build the light rail, we may borrow the Hong Kong model to build properties above the stations."

The bonds will yield a lower return than interest rates offered by private lenders but will be a relatively safe investment for the public as the bonds are guaranteed by the government, the source said.

Investors will be allowed to withdraw their investment or trade the bonds in a year, the report cited an unidentified authority in the city.

Wenzhou's experiment is viewed as a test bed for private investment in rail construction after the Ministry of Railway last Friday released a guideline that encourages private sector involvement.




 

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