Ms. Zhang, a schoolteacher in the central city of Anyang, lent $43,000 last year to entrepreneurs who couldn't get loans from state banks. Now as growth cools and Beijing cracks down on informal credit, Zhang and thousands of other small lenders are unpaid and angry.
Underground lending by ordinary Chinese like Zhang flourished over the past decade, providing trillions of yuan (hundreds of billions of dollars) needed by private companies that create China's new jobs and wealth.
Its popularity reflects public desperation for an alternative to China's banks, which pay low deposit rates that fail to keep up with inflation and channel savings to government companies.
But the high cost of underground credit _ interest rates of 70 percent a year or higher _ and a slump in global demand caused a wave of business failures last year, prompting owners in cities such as Wenzhou in the southeast to flee.
The shockwave is now hitting the Chinese savers who put up money for those loans. Protests erupted in Anyang and other areas as lenders demanded officials get back their money.
"We have no other investment options and bank interest rates are too low," said Zhang, who asked not to be identified further. Hopes of getting back the 270,000 yuan ($43,000) she lent are pinned on the courts so long as the government is willing to let a case proceed.
Rising defaults threaten to aggravate social tensions as the Communist Party tries to enforce calm ahead of a once-a-decade handover of power to a younger generation of leaders due late this year. The public already is fuming over inflation, corruption, product safety scandals and pollution.
Leaders including Premier Wen Jiabao, the top economic official, have repeatedly promised more credit for small companies. But most loans still go to state enterprises that have close ties with banks and form the power base of officials. Experts say there have been slight improvements but the situation hasn't changed fundamentally.
"It always has been hard for small Chinese companies to borrow money from banks," said Guo Tianyong, director of the Banking Research Center at Beijing's Central University of Finance and Economics. He said the situation has worsened in the past year.
Entrepreneurs were struggling with slumping global demand when Beijing clamped down on a credit boom to cool its overheated economy. State banks cut the small amount of private sector lending they were doing while continuing support to state industry. Private companies failed and the survivors cut payrolls.
Only 19 percent of bank lending last year went to small businesses, while total loans fell 6 percent from 2010 to 7.5 trillion yuan ($1.2 trillion), according to the official Xinhua News Agency.
The underground credit market is estimated by China's central bank and private sector analysts at 2 to 4 trillion yuan ($325 to $650 billion), or as much as 7 percent of total lending. In some areas, informal lending exceeds that of official banks.
The communist government allowed it to grow over the past decade, apparently seeing it as necessary to support entrepreneurs.
Borrowers range from manufacturers and traders to real estate developers who want to evade credit curbs imposed to cool surging housing prices. Middlemen, some of them state companies, put borrowers in touch with lenders for a fee.
Yao Yafei, a manager of a chemical company with 20 employees in the central city of Linfen in Shanxi province, said it has used informal lenders since 2004. He said that in its latest round, the company borrowed 500,000 yuan ($80,000) in July and repaid it two months later with 2 percent monthly interest.
"Underground banking is popular here," Yao said. "They offer really good service and send the money to you just one minute after you ask. They even send the cash to your place if you want.
Beijing launched a crackdown as it tightened economic controls after the 2008 crisis.
Regulators started to worry about underground lending after high returns drew state companies and civil servants into the business, blurring the line between banks and informal lending, according to Guo.
"They could easily borrow from banks and earn a profit by re-lending the money," he said. "If a problem happened, it would become destructive."
In Zhejiang province on the southeast coast, an export center hit by an avalanche of bankruptcies, 11 people have been sentenced to death since 2009 on charges of "illegal fundraising," according to news reports.
Among them was a 31-year-old woman, Wu Ying, who once was praised by state media as one of China's most successful businesswomen.
The penalty prompted an outcry on Internet bulletin boards by people who said it was too severe. All death sentences must be confirmed by China's supreme court, but in an apparent effort to mollify critics, the court took the unusual step of announcing it was reviewing Wu's penalty "with care."
Across the country, borrowers have been arrested after failing to repay loans running to billions of yuan (hundreds of millions of dollars).
Ordinary Chinese savers still have powerful incentives to take part.
Banks pay 3.5 percent on deposits, while inflation stood at 4.5 percent in January and was as high as 7.1 percent in July. Food prices are rising by double digits, adding to the urgency of earning a better return.
Zhang, the schoolteacher in Anyang in the central province of Henan, said she lent money last March to five local companies after friends put her in touch with the owners. She said such arrangements have been routine in Anyang for more than 10 years.
"There were no problems in the past two or three years, so people believed they could make money from it," she said by phone from Anyang.
The borrowers paid 4 percent interest each month but when the six-month loan came due in September, they said they had no money left, she said.
"It was just gone," Zhang said.
Thousands of frustrated lenders in Anyang took to the streets on New Year's Day, demanding the government recover their money, according to Hong Kong news reports.
Police blocked some who tried to board trains to Beijing to complain to the central government and authorities in Anyang are investigating hundreds of people suspected of involvement in investment schemes.
The propaganda department of Anyang's Communist Party branch said investigators have detained 160 people and recovered 1.8 billion yuan ($290 million) out of 4.6 billion yuan ($741 million) sought by lenders.
Chinese experts and state media say small-scale informal lending is legal and the limits of what is prohibited are fuzzy.
Xinhua said in a Dec. 16 report that making a private loan directly to a borrower is legal, though courts will not enforce interest more than four times the rate charged by official banks.
"There were differences between illegal fundraising and private lending, but no distinct boundaries were drawn," said Guo. "It's still not clear where the boundary is."
AP researchers Fu Ting, Yu Bing and Zhao Liang contributed.