A crowd of more than 1,000 protesters, according to some estimates, had gathered outside the Zhengzhou branch of the People’s Bank of China on Sunday to try to recover frozen savings held in rural banks. Footage checked by the Guardian shows protesters calling on local authorities to help them recover their savings. Some held banners reading: “Henan banks, give me my money back!”, while others called on China’s Premier Li Keqiang to intervene personally. Security guards in white shirts faced the crowd. The video shows them dragging protesters and beating them. A man with a swollen eye said he had been beaten by “gangsters” and dragged onto a bus by police. Plainly dressed security personnel clash with protesters outside the bank. Photo: Social Media/Reuters The incident was closely watched by China’s social media users. Some angry commentators posted on the US embassy’s Weibo account, calling on Washington to pay attention to the plight of the victims. In April, a large number of depositors caused a bank run when they tried to withdraw their savings from four banks in Henan. They then started organizing protests to demand their money back. The saga gained further attention in June when some protesters reported that their personal health codes – now mandatory for nearly all Chinese citizens to access public spaces – turned red to indicate they were Covid-positive. They suspected that local officials were behind the move, in an attempt to prevent them from protesting. One of the victims was Ms Yang, who kept 499,500 yuan (£62,000) in one of the banks. On April 18, she discovered she couldn’t access her money. “I got code red for about 10 days [when trying to complain]”, he told the Guardian. “The government should help us restart the cash withdrawal service as soon as possible so that we can resume our normal lives.” Henan province’s banking and insurance regulator said late Sunday it was “accelerating” plans to deal with the local financial crisis and “protect the legal rights and interests of the general public.” “(Authorities) are drawing up a plan to address the issue, which will be announced in the near future,” the statement said. Earlier reports blamed “criminal gangs” for controlling local banks. Gangs had carried out illegal transfers through virtual loans and used their shares – as well as “manipulation of executives” – to effectively take over several local banks since 2011, Henan police said. Michael Pettis, an economics professor at Peking University, said the events in Henan were a “very disturbing reminder” of what would happen if China’s existing economic model became unsustainable. “It appears that any long period of rising house prices and explosive growth in debt creates strong incentives for excessive risk-taking and even fraud,” Pettis said. The result, he said, was that as authorities took steps to rein in the bubble, they were always caught off guard by the extent of the hidden losses and fraud they discovered in the system. He added: “Because the last decade in China has seen a property bubble of historic proportions, along with the fastest increases in debt ever seen, I suspect we will see much more of this in the coming years.” The scandal has rattled Chinese regulators. After it was first reported in April, the Henan Provincial Commission for Disciplinary Inspection launched a special campaign targeting rural lenders, according to Chinese business magazine Caixin, citing sources familiar with the matter. Subscribe to First Edition, our free daily newsletter – every morning at 7am. BST The investigation shed light on how Xincaifu Group was behind more than 10 billion yuan (£1.25 billion) in non-performing loans in Henan’s rural credit system, Caixin reported, adding that at least three officials had also been investigated in the matter . by the anti-corruption agencies of Henan. But many were not convinced that their loss was to be blamed only on certain individuals. Some social media commentators accused the local government of “cooperating” with local banks to suppress their reasonable demands. “Why do you treat ordinary people like this?” a Weibo user asked in a post on Monday. “Please strictly investigate the Henan government.” Additional reporting by AFP
