by Xinhua writers Cheng Lu, Wang Wen and Jiang Chenrong
XI'AN, Sept. 2 (Xinhua) -- A man has been arrested by local police in coal-rich Shenmu County of northwest China's Shaanxi Province for spreading rumors that led to a public gathering, local authorities said last Friday.
The rumor-monger surnamed Liu, 53, was involved in underground lending and failed to pay off his ten million yuan worth of loan debt.
He gave vent to his anger by spreading rumors that the economy of Shenmu had suffered a drastic decline and everyone had been collecting debts.
Nearly 800 people gathered at a square to protest on July 15 after the rumors circulated online, a local official said.
Shenmu, a once impoverished county that relied on its husbandry and jujube, ranked among China's top 100 counties for the huge profits of its vibrant mining industry and became a land of millionaires in recent years.
Yet it grabs the headlines as rampant private lending caused a series of crises, especially since coal prices dropped sharply since the second half of last year.
A LAND OF MILLIONAIRES
Zhao Cunfa, 55, president of Shenmu's local coal mining association, set up a collective coal mine in 1992 with an annual output of nearly 100,000 tonnes and involved over 400 villagers as its shareholders.
"The coal mine was unprofitable before 2000. Families in my village could earn 20,000 to 3,000 yuan (3,268 to 4,902 U.S. dollars) annually," said Zhao.
But between 2005 and 2011, the coal price rose from nearly 200 yuan per tonne to around 900 yuan. Zhao's coal mine made a net profit of more than 100 million yuan in 2009.
"Each household in my village bought at least three apartments in Xi'an and Shenmu since they obtained tens of millions yuan worth of spare money at that time," he added.
With a reserve of 50 billion tonnes of high-quality coal, Shenmu went on a path to fast growth and bred many rich people.
The county's total output value surpassed 100 billion yuan in 2012. The per capita disposable income of urban and rural residents rose to 29,316 yuan and 12,537 yuan respectively.
During the boom times, Shenmu became a veritable showroom for luxury cars. Lamborghinis and Ferraris were easy to spot. "Withdrawing money from banks with sacks was common," said a local government official who refused to be named.
Speculation in coal mines became something of a fad.
A judicial official surnamed Jia in Ordos of Inner Mongolia Autonomous Region said a Shenmu coal businessman bought a coal mine in Ordos at a cost of 400,000 yuan. Two years later, he sold it for more than 800,000 yuan. Another year later, this coal mine was sold out again for 1 billion yuan.
"But this businessman had no idea of how to invest his money," Jia said. "He finally put the money into the risky underground loan market."