1. Basic case facts

According to a report in Wenhui Po on March 15, 2002, Guangrao County and Lijin County, located at the mouth of the Yellow River, are both located in Dongying City, Shandong Province, and are only a few kilometers apart. Ten kilometers away, ten years ago, the economic status of the two places was almost the same, but now, the people of Guangrao are far ahead economically. The year before last, Guangrao County's total industrial output value was close to 9 billion yuan, while Lijin County's was only 3 billion yuan. The industrial foundations of the two counties are almost the same, and their development models are basically the same. Why is there such a big gap?

In the past few years, banks have tightened money during the adjustment of my country's economic structure, and many townships and local enterprises have struggled. At this time, many localities and enterprises began to use the name of restructuring to evade financial debts. The Guangrao County Party Committee and County Government require that enterprises cannot escape financial debts through restructuring. For those enterprises that are on the verge of closure, taking into account the overall credit environment of the county, the county government will step forward to let some large enterprises with good profits bear all their debts first, and let the government departments find ways to gradually absorb them. For five consecutive years, every financial institution in Guangrao County has made profits. A good credit environment makes banks dare to lend to enterprises. This provides a strong financial backing for Guangrao's economic development.

In the same situation, some Lijin people took completely different measures. Since 1995, some enterprises in Lijin County have taken the form of parent separation, grafting and transformation during the restructuring process, "hanging" bank debts, and then established new enterprises in the name of bankruptcy to evade bank debts. In Lijin County, nearly half of the county-owned enterprises have evaded debts. This situation caused heavy losses to the bank. Short-term interest behavior has destroyed the long-term credit environment of Lijin County. The shaken and damaged credit foundation has affected Lijin's economic development. Those companies in Lijin that were able to take a breather by evading debt soon fell into trouble again because they lost the long-term support of banks.

2. Case Analysis

Honesty is the golden rule of the market economy. The market economy is a credit economy, and credit is the cornerstone of the market economy. The more developed the market economy is, the more it requires honesty and trustworthiness. This is an inherent requirement of the market economy and the basic code of conduct that people should follow when conducting economic and professional activities.

The market economy is a reputation economy. There is a huge gap between the economic development of Lijin and that of Guangrao. This is because some companies in Lijin County resort to fraudulent practices to evade bank debts and will be destroyed if they go bankrupt.