China- Why did the people of Henan take to the streets over a Bank scam?
Rishi Shrivastava
It is very rare that we hear about protests in China. The Chinese population is well aware of the consequences of going against the party and the state. Things however are gradually changing.
The people of Henan province in China recently came on roads to protest against a financial irregularities in the four banks of the province.
What the protest is all about?
It's been an uncommon circumstance for citizens of the People’s Republic of China that they are taking down on the streets over bank fraud from May. These four banks primarily operate for mid-small income families. And mass protests have been witnessed in Henan province’s capital Zhengzhou as people could not withdraw their capital from these rural banks since April.
The police forces were deployed to control the ever-increasing crowd as the protest became violent and uncontrollable. To overcome the situation, the banking regulatory authority, China Banking and Insurance Regulatory Commission (CBIRC) announced compensation for the depositors.
Why did the protest turn violent?
Initially, the protestors were demonstrating peacefully, but the group of people dressed in white clothes brutally clashed with them despite the presence of the police forces. These men are believed to be from the authorities and deployed due to a large number of protestors. Later the police fired tear gas and began a crackdown to disperse the crowd.
What are the protestors demanding for?
The financial scam has impacted thousands of customers and involved the capital of billions of dollars. And, people have been unable to get their money back. The CBIRC has assured them and initially announced to disburse the funds from Friday to depositors who had deposits up to 50,000 yuan and afterwards promised to clear all transactions.
The protestors are also accusing the Central bank’s involvement in the fraud and are further unsatisfied with the bank’s stand on scam; they are demanding a transparent probe to take place to find the deep-rooted cause behind it.
Who is behind the scam?
According to reports, Henan Xincaifu (New Fortune) Group, which has stakes in these banks, was involved in the fraud. Where it had collaborated with the bank's management discreetly to lure the public money through various mediums.
The Chinese authorities disclosed the name of suspect Lu Yi, a criminal gang leader, over the scam, where he used the money illegally to place it in real estate and other markets. However, due to the crash in the real estate market, the plan did not thrive, and the banks defaulted in repaying the funds to depositors.
What does the situation mean for the CCP government?
The situation appears unfortunate for the Communist party, as they do not expect the citizens to come on the streets with banners. However, the trouble has temporarily been settled, but the news of banking scams has become quite common in the last few years and has given a blow to the government. Therefore, the financial ecosystem of the PRC is going through an uneasy phase, where if it is not managed and corrected, it could lead to severe consequences for the whole economy.