China Promises ‘Steady Progress’ to Stop Rural Banking Crisis

An employee counts 100-yuan notes at a bank in Nantong in China’s eastern Jiangsu provin
AFP/Getty Images

China’s banking and insurance regulator claimed Thursday it was making “steady progress” toward resolving an economic fiasco in which millions of dollars in deposits across rural branches of China’s central bank were frozen without explanation in April, China’s state-run Global Times reported.

“[R]elevant work regarding some village banks, in which depositors found that they could not withdraw their cash, is making steady progress,” representatives of China’s Banking and Insurance Regulatory Commission (CBIRC) said on July 21.

“After the incident of the five rural banks in Central China’s Henan Province and East China’s Anhui Province, the banking regulator stated multiple times that it would strictly abide by laws and regulations, take facts as the basis and take the law as the criterion for handling the issue,” the CBIRC said at a press conference on Thursday.

The Global Times said the state regulator specifically held the press briefing “to explain the development of the banking and insurance industries in the first half of 2022.”

Administrators of the People’s Bank of China unceremoniously froze millions of dollars in deposits across several of its rural branches in Henan and Anhui provinces in April. The bank issued a vague message concerning the deposit freezes on April 18, telling customers they were allegedly “upgrading internal systems,” without elaborating.

“While nominally small, China’s numerous local banks have outsized significance because they lend to small and mid-sized firms so their activity can be an indicator of the health of the economy, the world’s second-biggest after the United States,” Reuters noted on May 18.

Bank clients affected by the China central bank’s deposit freezes have attempted to withdraw funds from relevant branches in Henan and Anhui provinces since April, to no avail. Authorities in charge of the People’s Bank of China thwarted two such attempts in mid-June and again on July 8 by illegally changing the health code statuses of bank clients so that they were unable to visit local branches of the bank. China’s central government requires people to show a state-issued health QR code with a “green” status (indicating that they have recently tested negative for the Chinese coronavirus) before they are allowed permission to travel. Officials for the People’s Bank of China asked a big data firm to change the bank clients’ health codes “red” without authorization.

The refusal of China’s central bank to release or address the frozen deposits led nearly 1,000 of the bank’s clients to protest the situation on July 10. Hundreds of people gathered outside the Zhengzhou branch of the People’s Bank of China to demand the financial institution disburse their funds. The demonstration was met with resistance from security personnel associated with the bank as well as local police officers in Zhengzhou, which is the capital of Henan province. Numerous participants of the rally told Reuters and the Associated Press they were physically assaulted by security forces during the demonstration.

Video footage of the event published by Reuters on July 10 showed security personnel using heavy hands to beat back protesters and remove them from the bank’s grounds. The video captured demonstrators holding banners that read, “No deposit, no human rights” and “Against the corruption and violence of the Henan provincial government.”

Security personnel announced the following message to the bank protesters via loudspeaker, according to Reuters, “Your actions have been deemed as illegal. Leave in 10 minutes. If you do not heed instructions from staff on site, if you do not leave and if you continue to disrupt society, the police will take stern action.”

Asian News International alleged on July 21 that China’s military deployed “armored tanks” to the streets of Henan to dissuade protesters from staging rallies outside local branches of the People’s Bank of China. The Indian news agency did not specify where in Henan province the alleged tank deployment took place nor when it occurred.

COMMENTS

Please let us know if you're having issues with commenting.