Falling together

18 April 2012 By Wei Gu

A bank’s share price drops and some businessmen are detained, apparently because they relied too much on the dismissed Chongqing chief. When political connections trump economic logic, too many risks are taken, and too many investments are made for the wrong reasons.

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Shares of Chongqing Rural Commercial Bank Co Ltd’s have dropped about 13 percent in the week starting April 16. China’s State Asset Supervision and Administration Commission has required local state-owned companies to report if there are any issues with local government investment projects and financing projects, according to China business Journal on April 14.
The chairman of Dalian Shide Group Co. Ltd., Xu Ming, and other executives, have been detained over their alleged involvement in economic crimes, Economy and National Weekly, a finance magazine produced by the official Xinhua news agency, reported on April 14.
Dalian Shide was the country’s 66th largest private company last year, with revenue of 12.1 billion yuan (US$1.92 billion), the report said. China Construction Bank Corp has halted lending to the plastic building materials producer and has begun recovering its outstanding loans, it said.

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