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2022 Henan banks protests

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2022 Henan banks protests
Protestors outside the Zhengzhou Central Sub-branch of the People's Bank of China in July 2022
DateApril 2022 – September 2022
(5 months)
Location
Zhengzhou, Henan, China
Caused byFraudulent practices in rural banks
GoalsAccess to depositors' funds
MethodsSit-ins, protests, online activism
Resulted inPartial reimbursement announced
Parties
  • Henan Provincial People's Government
  • Zhengzhou Municipal Public Security Bureau
  • Henan Provincial Public Security Bureau
  • Protestors
Lead figures

Several leaders

No centralized leadership

2022 Henan banks protests are series of demonstrations against four regional lenders of Henan province over alleged financial corruption.[1][2] Over the course of the previous two months, depositors have held multiple protests in the city of Zhengzhou, which serves as the capital of the province of Henan.[3]

History

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Background

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As of 2022, there are over 1,600 rural banks in China, located in 31 provinces, accounting for about 36% of the total number of banking financial institutions in the country.[4][5] According to the statistics of the People's Bank of China, as of the second quarter of 2021, a total of 122 rural banks were high-risk institutions, occupying about 29% of all high-risk institutions.[4]

Frozen accounts

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In April 2022, four rural banks in the Henan province stopped allowing customers to withdraw cash because "the banks were upgrading their systems".[6] Thousands were denied access to their accounts, triggering a bank run as customers of the four banks attempted to withdraw their funds en-masse.[7][8]

Later, however, it was noted that Sun Zhenfu, the main stockholder of the banks, had already been arrested by the government for "serious financial crimes" in March,[9][10] and an investigation by the China Banking and Insurance Regulatory Commission (CBIRC) wrote that a private investment company collaborated with the banks to illicitly attract public funds via online platforms.[11]

Customers started mounting small protests. A larger protest, involving thousands, took place on 23 May before being curtailed by police.[8] The South China Morning Post and BBC reported fears that by June the Health Code system was being abused.[12][8] By turning potential protesters' to code red they could be prevented from traveling.

CNN noted that a large number of the protesters were flying Chinese flags and carrying portraits of former Chairman Mao Zedong, indicating that their grievances are largely against the local authorities, which they seek the central government to address.[3]

On July 10, a protest in Zhengzhou, attended by hundreds turned violent. A uniformed group of officers ran into the people protesting and started to physically assault protestors.[8]

CBIRC responds

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On July 12, the CBIRC announced it would start reimbursing account holders, with deposits of up to 50,000 yuan ($7,400) being the first to be returned.[13][8]

Afterwards, the amount of compensation for the number of deposits are gradually increasing:

  • up to 100,000 yuan ($14,787), on July 21.[14]
  • up to 150,000 yuan, on August 1.[15]
  • up to 250,000 yuan, on August 8.[16]
  • up to 350,000 yuan, on August 15.[17]
  • up to 400,000 yuan, on August 22.[18]
  • up to 500,000 yuan, on August 30. And if it exceeds 500,000 yuan, compensation will be made according to the amount of 500,000, and the right to compensate beyond 500,000 yuan is reserved until the bank assets involved in this incident are properly disposed of.[19][20] The amount of 500,000 yuan is the maximum compensation amount for deposit insurance.
  • On January 9, 2023, it was reported that the bank involved began to make an appointment to register depositors with more than 500,000 yuan.[21]。

Effect to wider economy

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The Henan bank crisis is contributing to growing volatility in the Chinese financial system. Since at least 2022, there has been an increasing number of defaulted property loans recorded on the books of smaller, regional lenders. The Australian Financial Review reported that the Chinese government does not seem to have a satisfactory solution to the financial and property sector crisis.[22]

Misinformation

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A video circulated on social media which claimed that the People's Liberation Army deployed tanks to defend the banks from the protesters. An Associated Press fact check found that the footage was from a routine training exercise in Shandong, more than 400 kilometers away.[23]

References

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  1. ^ "Hundreds protest against corruption in central China". The Japan Times. 2022-07-10. Retrieved 2022-07-12.
  2. ^ "China detains alleged Henan bank fraud 'gang' after rare mass protests". CNA. Retrieved 2022-07-12.
  3. ^ a b Gan, Nectar (11 July 2022). "China crushes mass protest by bank depositors demanding their life savings back". CNN. Retrieved 2022-07-12.
  4. ^ a b Duan, Siyu (2022-06-21). Lin, Jiechen (ed.). "1651家村镇银行现在怎么样？鲁冀豫数量最多，全国122家为高风险" [How are the 1651 rural banks now? Shandong, Hebei and Henan have the highest number, with 122 of the rural banks are at high risk]. China Business News (in Simplified Chinese). China Business Network.
  5. ^ Goldman, David P. (12 July 2022). "Property market woes focus fiscal power in Beijing". Asia Times. Retrieved 13 July 2022.
  6. ^ Bartholomeusz, Stephen (2022-07-12). "China's response to bank protests hints at a wider problem". The Sydney Morning Herald. Retrieved 2022-07-12.
  7. ^ "Protest in China over frozen bank accounts ends in violence". the Guardian. 2022-07-12. Retrieved 2022-07-18.
  8. ^ a b c d e "Henan: Officials pledge to release funds after China bank protest". BBC News. 2022-07-12. Retrieved 2022-07-12.
  9. ^ "Henan Bank Depositors Hit With Red Health Codes". Sixth Tone. 14 June 2022. Retrieved 18 July 2022.
  10. ^ Mcgregor, Grady. "A rare, violent protest in China signals the start of a banking crisis". Fortune. Retrieved 13 July 2022.
  11. ^ "China Protesters Demand Back Billions Tied to Suspected Scam". Bloomberg News. 2022-05-25. Retrieved 2022-07-13.
  12. ^ "Fear of data misuse as health code turns red for Chinese bank protesters". South China Morning Post. 2022-06-14. Retrieved 2022-07-18.
  13. ^ "China to Repay Bank Scam Victims After Protests Turn Violent". Bloomberg.com. 12 July 2022. Retrieved 2022-07-12 – via www.bloomberg.com.
  14. ^ "UPDATE 1-China to repay more depositors to defuse rural bank scandal". Reuters. 2022-07-21. Retrieved 2022-07-22.
  15. ^ "8月1日起，河南对10万至15万村镇银行客户开始垫付". 第一财经. 2022-07-29. Archived from the original on 2022-07-29. Retrieved 2022-07-29.
  16. ^ "河南银保监局 河南省地方金融监管局公告（第4号）_河南省地方金融监督管理局". jr.henan.gov.cn. Retrieved 2022-08-05.
  17. ^ "河南银保监局 河南省地方金融监管局公告（第5号）_河南省地方金融监督管理局". jr.henan.gov.cn. Retrieved 2022-08-13.
  18. ^ "河南银保监局 河南省地方金融监管局公告（第6号）_河南省地方金融监督管理局". jr.henan.gov.cn. Retrieved 2022-08-13.
  19. ^ "河南银保监局 河南省地方金融监管局公告（第7号）". 河南省地方金融监督管理局. 2022-08-29. Retrieved 2022-08-29.
  20. ^ "蚌埠银保监分局 蚌埠市地方金融监管局公告（第7号）_蚌埠市地方金融监督管理局". jrj.bengbu.gov.cn.
  21. ^ "河南四家村镇银行新进展：启动50万元以上客户预约办理！". finance.sina.com.cn. 2023-01-10. Retrieved 2023-01-10.
  22. ^ "What's behind the Chinese bank runs?". Australian Financial Review. 2022-07-11. Retrieved 2022-07-12.
  23. ^ Video of tanks shows Chinese military exercise, not bank barricade Huizhong Wu and Ali Swenson, Associated Press, July 23, 2022
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