China bank run fears intensify as violent clashes break out this weekend

Concerns are growing over the intensifying risk of a full scale bank run in China, with mass protests held outside bank branches in China’s Henan Province throughout this weekend (July 9 & 10).

Asia Markets has verified video and images shared across Chinese social media platforms, including Weibo and WeChat, showing violent clashes between police and depositors who have been unable to withdraw funds.

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Asia Markets recently exclusively revealed six banks across the Henan and Anhui provinces which have effectively frozen deposits. The banks are the 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), and the Yixian County Village Bank (Huangshan City, Anhui Province).

These banks remain at the center of the anger, however the protests have now moved to People’s Bank of China (PBOC) branches across the region, including in the capital, Zhengzhou.

China bank run

“A serious escalation”

There have been suggestions contagion is unfolding across China with large lines seen at banks in Shanghai and Beijing in recent weeks.

A major run on Chinese banks would have serious global implications.

University of Chicago political scientist, Dali Yang, labelled this weekend’s protests a “serious escalation”.

“This is a serious escalation of protests by depositors who lost their access to their accounts (and/or) funds in township banks in the central Chinese province of Henan,” he said.

“The protests are directed at the Henan authorities.”

A WeChat user who posted photos from the protest in Zhengzhou told Asia Markets the majority of protestors had come from rural areas and have recently been told that their money, which has been frozen for months, will not be recoverable.

“They felt like they were getting silence for the bosses of rural banks and authorities, now they want the Government to address this big problem so the fury has moved to the People’s bank.”

“No longer is it just these rural Henan residents, everyone in China is worried that this can happen without the Government helping its people and protecting their deposits.”

In June, Reuters reported that planned protests were thwarted after depositors’ health apps signalled a COVID-19 ‘code red’. A code red is given to people who have come into contact with a positive COVID-19 case and requires a mandatory two week quarantine period.