A depositors’ rights movement triggered by the collapse of several rural banks in China’s Henan Province has been simmering for a while and shows no signs of abating.
The local government first tried to prevent angry depositors from congregating by using the pretext of “pandemic prevention” and imposing restrictions on individual depositors through their mandatory COVID-19 smartphone apps. When that failed, the authorities started sending thugs wearing white shirts to beat up the depositors — including elderly people and pregnant women — causing bloody injuries in several cases, while the police stood by and did nothing. It resembled the 2019 Yuen Long attack on Hong Kong democracy advocates.
Besides using violence to threaten depositors, many of whom had lost their life savings, the authorities also tricked them into signing declarations that they would drop their claims in exchange for an “advance payment” of 50,000 yuan (US$7,389).
These incidents demonstrate China’s uncivilized ways to “solve problems” and expose the extent of government corruption. They also reveal emerging problems in China’s economy.
Rural bank failures might be just a prelude to the coming collapse of China, the bursting of its economic bubble.
China’s numbers-oriented economic policies, as well as its serious problems of corruption and ineffective regulation, made real estate the easiest option for fraudulent accounting, and collusion between government entities and businesses in pursuit of profit. Property developers used high-leverage and high-turnover loans to set up a large number of construction projects. Huge sums of hot money blindly poured into the property market, driving up housing prices and creating the illusion of a prosperous urban China posting impressive economic figures. While spurring the development of related industries, it also caused a real-estate glut.
Speaking at the Chinese Communist Party’s 19th National Congress in October 2017, Chinese President Xi Jinping (習近平) said: “We must not forget that housing is for living in, not for speculation.”
The Chinese government then adopted a policy of suppressing property prices, but its measures went too far and caused many property developers to close or default. It dealt a heavy blow to the housing market and triggered a chain reaction of bad bank loans. Consequently, the government was forced to relax the restrictions, and even came up with a ridiculous policy of “interviewing” wealthy property owners who “maliciously refused to sell their properties.”
However, political issues such as China’s iron-fisted COVID-19 containment policies, its human rights issues and its pro-Russian stance, as well as rising operating costs, have prompted many investors to leave the country. This has pushed up the unemployment rate.
Under such circumstances, there is little interest in buying real estate, causing the country’s worrisome property vacancy rate to reach new highs and starting to cause ruptures in financial supply chains.
The problem of unfinished buildings has continued to spread, starting with property developer Evergrande Group. Mortgage takers who cannot stand the situation anymore have started to collectively refuse mortgage payments on unfinished homes.
This has a knock-on effect on the banking system. When China’s four largest state-owned banks announced that the risk posed by bad debts is “controllable and preventable,” it caused even greater panic.
Problems stemming from the real-estate sector are snowballing and could be the straw that breaks the camel’s back.
China’s growing economic problems, in combination with inflationary pressure and weak domestic demand, might well drag down the global economy.
With the crisis of confidence in China’s banking system potentially leading toward collapse, symptoms such as bank depositors’ protests, mortgage payment boycotts and bank runs are likely to crop up all over the country.
Any further waves of protest will probably be met with further brutal crackdowns, as well as Chinese-style countermeasures such as stripping people’s wealth and printing large amounts of money. These “solutions” would only make the problems worse.
Xi might then have to decide whether to divert attention from the political and economic storms by ordering an attack on Taiwan.
Hong Tsun-ming is a specialist in the Taiwan Statebuilding Party’s international section.
Translated by Julian Clegg
For Xi Jinping (習近平) and the Chinese Communist Party (CCP), the military conquest of Taiwan is an absolute requirement for the CCP’s much more fantastic ambition: control over our solar system. Controlling Taiwan will allow the CCP to dominate the First Island Chain and to better neutralize the Philippines, decreasing the threat to the most important People’s Liberation Army (PLA) Strategic Support Force (SSF) space base, the Wenchang Satellite Launch Center on Hainan Island. Satellite and manned space launches from the Jiuquan and Xichang Satellite Launch Centers regularly pass close to Taiwan, which is also a very serious threat to the PLA,
Taiwan is beautiful — no doubt about it. In Taipei, the streets are clean, the skyline is gorgeous and the subway is world-class. The coastline is easily accessible and mountains can be seen in the distance. The people are hardworking, successful and busy. Every luxury known to humankind is available and people live on their smartphones. As an American visiting for the first time, here are some things I learned about the country. First, people from Taiwan and America love freedom and democracy and have for many years. When we defeated Japan in 1945, Taiwan was freed from Japanese rule. In
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