China arrests suspected gang of banking scammers after rare mass protests

Members of a “criminal gang” accused of taking over local banks have been arrested in central China after rare protests over alleged financial corruption sparked violent clashes between customers and authorities.

China’s rural banking sector has been hit hard by Beijing’s attempts to curb the property bubble and rising debt, as well as financial repression, which has had a ripple effect on the world’s second-largest economy.

The slowdown has forced four banks in Henan province to freeze all cash withdrawals since mid-April, leaving thousands of small depositors without funds and sparking sporadic demonstrations.

In one of the largest such rallies on Sunday, hundreds of people gathered outside a branch of the People’s Bank of China in Zhengzhou, the capital of Henan province, demanding their money, according to multiple witnesses who declined to be named.

Protesters held banners accusing local officials and police of corruption while calling on the central government to “severely punish” those responsible, video footage verified by AFP showed.

Footage from the Sunday rally shows protesters throwing objects, and one participant told AFP that unidentified people hit and injured the demonstrators.

In another video, confirmed by AFP, a man with a swollen eye says he was beaten by “thugs” and dragged onto a bus by police.

Some demonstrators have accused officials of colluding with local banks to crack down on rallies, and provincial authorities were suspected last month of violating the country’s mandatory Covid-19 health code to effectively bar protesters from public spaces.

The pass has become a ubiquitous part of life in China under Beijing’s strict anti-Covid-0 strategy and is required to access the vast majority of buildings, malls, public spaces, and some forms of public transportation.

Protests are relatively rare in a tightly controlled country where the authorities seek social stability at all costs and where opposition is quickly crushed.

But desperate citizens sometimes managed to organize mass gatherings, usually when their target was local governments or individual corporations.

– deepening crisis –

Local authorities did not immediately comment on the unrest, but police in the nearby city of Xuchang said they had arrested members of an alleged “criminal gang” on suspicion of being involved in a scheme to gain control of local banks.

The gang made illegal transfers through fictitious loans and used their shareholdings and “manipulated executives” to effectively take over several local banks starting in 2011, police said late Sunday night.

Henan’s banking and insurance regulator also said it was “accelerating” plans to deal with the local financial crisis and “protect the legitimate rights and interests of the general public.”

But analysts expect the economic crisis to deepen and the fallout from last year’s collapse of real estate giant Evergrande to linger.

These issues “seem to be the tip of an iceberg of serious systemic and financial risks for small and medium-sized banks in China,” consulting firm SinoInsider said in a report last week.

“It will soon be found that other small and medium-sized banks will face similar challenges, especially as the financial contagion of the Evergrande debt crisis continues to spread and the Chinese economy noticeably worsens,” he added.

– Why do you treat people like that? –

On Monday, demonstrators in Henan province drew sympathy on Chinese social media, with many on the Weibo platform pointing the finger at local officials.

“Why do you treat ordinary people like that?” one Weibo user asked in a post on Monday.

“Please strictly investigate the Henan provincial government.”

However, online discourse around the protest remained under tight control, with Weibo turning off the hashtag for the “incident of Zhengzhou police assault on the public” used by some people posting reports of Sunday’s violent clashes.

Meanwhile, a report that protesters were beaten at a protest in Zhengzhou was removed from the English-language website of state-run Sixth Tone just hours after it was posted.