Members of a “criminal gang” accused of taking control of local banks have been arrested in central China after rare protests over alleged financial corruption led to violent clashes between customers and authorities.
China’s rural banking sector has been hit hard by Beijing’s efforts to stem a housing bubble and rising debt, in a financial crackdown that has had far-reaching implications for the world’s second-largest economy.
The slowdown forced four banks in Henan province to freeze all cash withdrawals since mid-April, leaving thousands of small savers without money and sparking sporadic demonstrations.
In one of the largest rallies of its kind to date, hundreds gathered outside a branch of the People’s Bank of China in Henan’s capital Zhengzhou on Sunday demanding their money, according to several witnesses who asked not to be named.
Protesters held up banners accusing local officials and the police of corruption and called on the central government to “severely punish” those responsible, video footage verified by AFP showed.
Footage from Sunday’s rally showed protesters throwing objects, while a participant told AFP protesters were hit and injured by unidentified men.
Another video, confirmed by AFP, showed a man with swollen eyes saying he was beaten by “gangsters” and dragged onto a bus by police.
Some protesters accused officials of colluding with local banks to suppress rallies, and provincial authorities were suspected last month of abusing the country’s mandatory health regulations to effectively ban protesters from public spaces.
Protests are relatively rare in tightly controlled China, where authorities enforce social stability at all costs and resistance is quickly suppressed.
But desperate citizens have occasionally managed to organize mass gatherings, usually when their targets are local governments or individual businesses.
– Deepening crisis –
Local authorities did not immediately comment on the unrest, but police in the neighboring city of Xuchang said they arrested members of an alleged “criminal gang” for their alleged involvement in a plot to seize control of local banks.
The gang conducted illicit wire transfers through fictitious loans and used their holdings — as well as “executive manipulation” — to effectively take over several local banks beginning in 2011, police said late Sunday.
The Henan provincial banking and insurance regulator also said it was “accelerating” plans to deal with the local financial crisis and “protecting the legal rights and interests of the general public.”
However, analysts expect the economic crisis to deepen and the aftermath of last year’s collapse of real estate giant Evergrande to continue.
The problems “appear to be the tip of the iceberg of serious systemic and financial risks at small and medium-sized banks in China,” found a report by risk consultancy SinoInsider last week.
“Other small and medium-sized banks may soon face similar problems, especially as the financial contagion from the Evergrande debt crisis continues to spread and the Chinese economy deteriorates significantly,” she added.
– ‘Why do you treat people like this?’ –
The protesters in Henan drew widespread sympathy on Chinese social media on Monday, with many pointing fingers at local officials on the Weibo platform.
“Why do you treat ordinary people like this?” asked a Weibo user in a post on Monday.
“Please strictly investigate the Henan government.”
However, online discourse surrounding the protest remained tightly controlled as Weibo disabled the hashtag for “the incident where Zhengzhou police met the public,” which some people had been using to report Sunday’s violent clashes.
Meanwhile, a report that protesters had been beaten at the Zhengzhou protests was removed from the English-language website of state-backed outlet Sixth Tone just hours after it was published.
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