Runs on banks, which is essentially the economic point of no return for a financial institution, have not happened very often in modern history, but when they do and are widespread, the fallout can last for years.
The U.S. experienced a massive bank run following the stock market crash of 1929 followed by the Great Depression. A few years earlier, in 1927, bank runs in Japan led to the collapse of dozens of institutions. There was a banking crisis in Myanmar in 2003 from which the country has never really fully recovered.
But unbeknownst to most is that there is a budding bank-run crisis now building in China as that country experiences a major economic and financial upheaval that is unparalleled in recent history, according to a report by Asia Markets:
Multiple sources contacted by Asia Markets, have confirmed deposits at the following six banks have been frozen since mid-April.
- Yuzhou Xinminsheng Village Bank (located in Xuchang City, Henan Province)
- Zhecheng Huanghuai Bank (City of Shangqui, Henan Province)
- Shangcai Huimin Rural Bank (Zhumadian City, Henan Province)
- New Oriental Village Bank (City of Kaifeng, Henan Province)
- Huaihe River Village Bank (Bengbu City, Anhui Province)
- Yixian County Village Bank (Huangshan City, Anhui Province)
The bank runs come on the heels of the collapse of China Evergrande, the former top-selling developer in the country, which led to rare public protests as ordinary Chinese citizens faced the prospect of losing their life savings that they used for deposits on housing.
Asia Markets reported that the banks and branches in the provinces of Henan and Anhui issued announcements in April that said the institutions were suspending online and mobile banking in order to upgrade their systems. But at the same time, bank customers reported that they could not withdraw or transfer funds via online access, mobile apps or third-party banking platforms.
That led customers to rush to those local bank branches to secure their money, only to be told they could not access it.
By late last month, images began to emerge on Chinese social media accounts of some demonstrations and rioting in front of several bank branches; Asia Markets reported having verified the images as genuine via local contacts.
The report noted: "According to one user on the Chinese social media platform WeChat, the protests are ongoing but are rarely mentioned in Chinese press."
“It has caused widespread concern on the internet but the media attention is not high, the highest degree of concern is the four banks in Henan," one noted.
"#China's Zhengzhou City, Henan Province (deadly flooding occurred in 2021), massive protests carried out after many lost all their savings in a Bank Run, chanted w/ slogans 'Give me back my money,'" one tweet with video noted.
?1/2 #China's Zhengzhou City, Henan Province (deadly flooding occurred in 2021), massive protests carried out after many lost all their savings in a Bank Run, chanted w/ slogans "Give me back my money". pic.twitter.com/iA9pFUglOW
— Northrop Gundam (@GundamNorthrop) May 21, 2022
"In response from their communist government, what they got wasn't the returns of their money, but another massive police's violent crackdowns & arrests. Global communities are not supported to see this," another tweet with a video showing Chinese police cracking down added.
?2/2 In response from their communist government, what they got wasn't the returns of their money, but another massive police's violent crackdowns & arrests. Global communities are not supported to see this. pic.twitter.com/j5tLgmOKqF
— Northrop Gundam (@GundamNorthrop) May 21, 2022
The People’s Bank of China (PBOC) responded to the rural bank run, issuing a statement on April 25: “The People’s Bank of China is highly concerned… At present relevant departments have launched an investigation, the People’s Bank of China will cooperate with the relevant departments, to protect the rights of financial consumers.”
China appears to be on the verge of economic implosion.
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