Bank fraud victims’ frustration reaches boiling point . . .
Angry bank customers unable to withdraw their cash from local banks in Zhengzhou, the capital of east-central China’s Henan province, took to the streets in protest Sunday. The action was the latest escalation in a months-long scandal involving citizens who made deposits in local banks – in some cases, their life savings – with promises of a high rate of return. In April, these customers were suddenly unable to make online cash withdrawals. Angry customers, some from outside Henan, staged a protest in May, which ended in clashes with local police. A subsequent demonstration was planned for June, but several people were prevented from travelling after an inexplicable change in their status on a COVID-monitoring app, a move many believe was an abuse of power by local authorities looking to silence them.
Image-sharing outpaces the censors . . .
Scenes of Sunday’s violent clash between protesters and uniformed and plainclothes police were captured in photos and videos widely shared on Chinese social media before being taken down by censors. A website that monitors discussion on the social media platform Weibo pointed out that much of the public anger was focused less on the bank scandal than on local authorities’ violent response to the protesters and their attempts to conceal information about the event. The day after the protests, provincial authorities announced that customers’ deposits would be returned to them, albeit in phases, but social media commentary suggests the gesture has failed to placate many Chinese netizens.
More where that came from?
Local banks like those at the heart of the Henan controversy account for more than one-third of China’s lenders. But these banks are also subject to less regulatory oversight than larger banks, making them more susceptible to corruption. While the Zhengzhou case illustrates the need for improved oversight, governments might be reluctant to rein them in, as the banks are vital nodes for extending credit to small businesses and boosting local economies. China introduced a deposit-insurance mechanism in 2015 intended to protect consumers, but it has yet to be widely tested. As the economy slows and China’s financial risk rises, that test may be around the corner.