Major Banking Crisis in China, Rights Protests Abound, Widespread Resistance
Summary
TLDRRecent turmoil in China's banking industry, highlighted by the collapse of Ji Bank, has sparked widespread protests and raised concerns about financial stability. Videos show large crowds demanding their money back, as rumors of closures spread. Despite authorities' denials, issues persist with depositors unable to access funds, exacerbated by corruption and economic downturns. The situation reflects broader economic challenges, with major banks cutting salaries and undergoing restructurings. The crisis underscores vulnerabilities in China's banking sector, posing risks to social stability and the broader economy.
Takeaways
- 📢 Victims of bank failures in China are protesting for justice, gathering at the Shanghai Public Security Bureau.
- 🏦 The banking industry in China, once considered stable, is experiencing unprecedented turmoil.
- 📅 On July 6, Ji Bank officially collapsed, despite earlier denials of closure rumors, causing depositors to gather at the bank entrance.
- 📉 The collapse of real estate and banks is signaling a significant financial crisis in China.
- 🚔 Authorities dispatched police to make arrests as depositors demanded their money back, while the bank claimed normal operations.
- 💼 Internal corruption within Ji Bank has been a contributing factor, with multiple high-ranking officials dismissed for serious violations.
- 🏢 The closure of the Changchun branch of the Agricultural Bank of China on July 4 raised further concerns about the stability of state-owned banks.
- 💸 Major state-owned banks in China are implementing large-scale salary cuts and layoffs, affecting both employees and executives.
- 🔄 Over 80 small and medium-sized banks in China have undergone mergers and restructuring in the first half of the year alone.
- ⏳ A financial analyst warned that China's banking sector is on the edge of a dangerous cliff, with the real estate crisis exacerbating the situation.
Q & A
What recent event caused turmoil in China's banking industry?
-The collapse of Ji Bank on July 6, 2024, led to widespread turmoil in China's banking industry.
How did the public react to the collapse of Ji Bank?
-The public reacted by gathering at the bank entrance to defend their legal rights and demand their money back.
What was the initial response of Ji Bank to the rumors of its closure?
-Ji Bank initially denied the rumors of its closure, claiming normal operations.
What broader economic issues are contributing to the crisis in China's banking sector?
-The collapse of real estate giants like Evergrande and widespread defaults in the private financing sector are significant contributors to the crisis.
What role does internal corruption play in Ji Bank's crisis?
-Internal corruption at Ji Bank, including the dismissal of multiple high-ranking officials for serious violations, has significantly contributed to its crisis.
What impact has the banking crisis had on the employees of Pingan Bank?
-Pingan Bank employees are experiencing massive layoffs, relocation demands, and salary cuts as part of the bank's cost-cutting measures.
How are state-owned banks like China Construction Bank responding to financial pressures?
-State-owned banks like China Construction Bank are implementing large-scale salary cuts and demanding employees return bonuses.
What challenges are small and medium-sized banks in China facing?
-Small and medium-sized banks in China are undergoing mergers and restructuring, with many struggling due to poor management and high levels of non-performing loans.
What are the potential social implications of the banking crisis in China?
-The banking crisis could threaten social stability, especially if depositors, many of whom are middle class or elderly, lose their savings.
How are Western financial institutions being affected by China's economic slowdown?
-Western financial institutions are also impacted, with significant layoffs in their China divisions and some exiting banking operations in certain provinces.
Outlines
📉 Unrest and Bank Collapses in China
Recent protests by victims of bank collapses in China, notably outside the Shanghai Public Security Bureau, highlight ongoing unrest. The banking industry, previously seen as stable, faces unprecedented turmoil. On July 6, Ji Bank officially collapsed despite prior denials, leading depositors to protest. The crisis links to the collapse of real estate giants like Evergrande. Authorities attempt to downplay the issues, but public discontent grows, fueled by the inability to withdraw deposits and accusations of corruption and mismanagement within banks like Ji Bank.
🔍 Further Bank Troubles and Government Response
On July 4, the Agricultural Bank of China’s Changchun branch closed, sparking protests. Reports of salary cuts and layoffs at major banks, including Ping An and China Construction Bank, indicate wider industry issues. Despite claims of normal operations, widespread salary reductions and forced relocations suggest financial instability. The CCP's efforts to maintain control include punishing those spreading 'false' information and implementing salary caps to promote 'shared prosperity,' further affecting employee morale and trust in state-owned enterprises.
📊 Mergers and Structural Changes in Smaller Banks
Small and medium-sized banks face large-scale restructuring, with over 80 banks merging or being restructured in the first half of the year. The rapid pace of mergers raises concerns about the viability of these banks. Reports highlight poor management and high non-performing loan ratios, exacerbated by the real estate crisis. Critics argue that merging bad banks creates larger, more problematic institutions. The Chinese government's response to these issues, including arrests and misinformation campaigns, further destabilizes public trust.
⚠️ Broader Economic Concerns and Global Impact
China’s banking crisis mirrors broader economic issues, with both real estate and banking sectors in turmoil. The collapse of real estate giants affects banks heavily involved in mortgage and developer loans. Economic slowdown reduces corporate loan demand, worsening the cycle of financial instability. Western financial institutions also suffer from China's economic downturn, leading to significant layoffs. Analysts express deep concerns about the potential for a financial meltdown, exacerbated by the CCP’s handling of the crisis and the broader impact on global markets.
Mindmap
Keywords
💡Ji Bank
💡Protests
💡Banking Crisis
💡Evergrande
💡Depositors
💡Chinese Communist Party (CCP)
💡Real Estate Collapse
💡Corruption
💡Salary Cuts and Layoffs
💡Economic Downturn
Highlights
Victims of Hyen have continued to protest, gathering at the Shanghai Public Security Bureau to seek justice.
The banking industry, once considered stable, is now experiencing unprecedented turmoil signaling a wave of collapse.
On July 6, a video posted on X showed a large crowd of Chinese citizens gathering outside Ji Bang Bank protesting loudly.
The head office of Ji Bank denied rumors of closure, but on July 6, Ji Bank officially collapsed.
Depositors gathered at the bank entrance to defend their legal rights, with one person commenting 'the domino effect has begun.'
Authorities dispatched police to make arrests as victims demanded their money back while the bank claimed to be operating normally.
The rumored collapse of Ji Bang, dragged down by Evergrande, can no longer be hidden, causing significant shock waves in China's financial industry.
The local Financial Supervision Bureau of Nanchang City issued a notice refuting rumors and threatening severe punishment for those involved in spreading false information.
Despite official denials, news of Ji Bank's closure emerged, proving the rumors accurate and signaling deep issues in the banking sector.
China's economy has been on a downward trend with consumers becoming more reserved with their spending.
Ji Bank, established in December 2015, faced a crisis exacerbated by the collapse of the Nanchang Private Financing Registration Service Center.
Internal corruption within Ji Bank is alarming, with multiple high-ranking officials dismissed in recent years.
If Ji Bank's case is considered a local crisis, the collapse of a state-owned bank would completely shatter people's confidence in state-owned banks.
On July 4th, the Changchun branch of the Agricultural Bank of China closed, leading many people to gather at the bank entrance to seek justice.
Pingan Bank is reportedly undergoing massive layoffs, affecting over 100 employees and causing a significant stir in financial circles.
China Construction Bank implemented large-scale salary cuts, causing a strong reaction throughout the banking industry.
Reports indicate that over 80 small and medium-sized banks have undergone mergers and restructuring in the first half of the year alone.
The People's Bank of China report indicates 337 high-risk banks with total assets of 6.63 trillion yen, primarily small and medium-sized banks.
There are concerns that the collapse of poorly performing small banks could directly threaten social stability.
The broader economic downturn in China has led to the emergence of professional debtors, forming an industry chain with black market intermediaries.
Western financial institutions are also affected by China's economic slowdown, leading to significant layoffs in their China divisions.
Transcripts
victims of hyen have continued to
protest recently gathering at the
Shanghai public Security Bureau to seek
Justice the issue remains unresolved and
the banking industry once considered
stable is now experiencing unprecedented
turmoil signaling a wave of collapse on
July 6 a video posted on X showed a
large crowd of Chinese citizens
Gathering outside ji bang protesting
loudly the post stated the head office
of ji Bank Bank denied Rumors in
relation to closure 2 days ago but today
July 6th ji bank has officially
collapsed depositors gathered at the
bank entrance to defend their legal
rights one person commented the domino
effect has begun the collapse of real
estate and Banks is starting the Chinese
Communist Party can no longer Salvage
the situation and is
self-destructing as early as June 29th a
video posted on X showed a large crowd
gathered outside ji
Bank shouting desperately return our
money return our money authorities
dispatch police to make arrests the post
noted victims demand their money back
while the bank claims to be having
normal operations the rumored collapse
of Jay bang dragged down by evergr can
no longer be hidden the financial storm
triggered by the successive collapses of
Chinese real estate Giants is causing
significant shock waves in China's
financial industry potentially leading
to a major collapse in the banking
sector jangi Bank staff claimed that on
June 29th they gradually restored normal
withdrawal functions for users and
emphasized that all deposit and
withdrawal operations were normal
however it seems that some people are
still unable to withdraw their own money
on July 4th the local Financial
supervision Bureau of Nanchang City in
jangi Province issued a notice refuting
rumors stating that
a small number of people gathered at the
head office of jangi bank and posted
false information online suspected of
disrupting the order of financial
institutions they also threatened that
those involved will be severely punished
by law the Chinese government proceeded
to block news of the jangi bank collapse
but the public did not buy it and went
on criticizing officials whenever a
problem arises they immediately try to
distance themselves from it what do you
mean by false information why don't they
mention the reason why people gathered
up they only call it a rumor without
explaining the cause some other comments
read not explaining the situation but
already assigning blame or poor
supervision but excellent at
blaming however just two days after the
CCP officials refuted the rumors news of
ji bank's closure emerged proving the
so-called rumors to be accurate China's
economy has been on a downward Trend in
recent years
with consumers becoming more reserved
with their spending people have been
depositing their hard-earned money into
financial institutions fearing a future
without money however incidents of
people being unable to withdraw their
deposits have persisted causing
Widespread Panic public records show
that ji Bank was established in December
2015 as the first provincial corporate
bank in ji Province previously known as
Nanchang City Commercial Bank founded in
February 199 8 annual reports indicate
that the top 10 shareholders of ji Bank
are mainly state-owned entities besides
being dragged down by ever's collapse
another reason for ji bank's crisis
according to reports from tyan
press.com involves a nchang private
financing registration service center
company referred to as mingrong Den
Center economic Observer reported on
June 1st that mingrong Den Center is
established for 9 years recently
experienced widespread default on its
recommended investment products leaving
many investors unable to recover their
funds and due interest the crisis
affected over 2,200 investors involving
tens of billions of Yen primarily local
citizens of Nanchang especially those
aged 60 to 90 and investors with 1 to2
million yen the center's operations have
since been
suspended however ever Nan Chang's local
Financial supervision Bureau officials
claim that ji bang has no relationship
with Mong Den Center other than being
its account opening Bank additionally
internal corruption within ji bank is
alarming in recent years multiple high
ranking officials have been dismissed
including former chairman Chen sha Ming
former deputy president and board
secretary shuji Hong along with Party
Committee Member and Deputy president
yugen
who is currently under investigation for
serious violations of discipline and law
coupled with the bank's annual decline
in net profit its profitability is
increasingly questioned which may also
be a significant cause of the crisis if
johi bank's case is considered a local
crisis then the collapse of a
state-owned bank would completely
shatter people's confidence in
state-owned banks on July 4th the Chang
Chun branch of the Agricultural Bank of
China closed with many people gathering
at the bank entrance to seek Justice a
video uploaded by a citizen stated such
a large Bank closed its doors just like
that this is a head office of the
Agricultural Bank of China in Chong Chun
and it has closed the agricultural Bank
of China is one of China's four major
state-owned Banks if a branch can
collapse doesn't mean this is the only
problematic branch Bank closures
undoubtedly make ordinary depositors the
biggest victim
but news of large scale pay cuts or
layoffs at Banks continues to emerge
indicating that employees are also
suffering and these Banks May each be a
financial Time Bomb waiting to explode
pingan Bank known as a rising star in
China's banking sector is reportedly
undergoing massive layoffs as of July
6th causing a significant stir in
financial circles to cut costs pingan
bank is transferring over 100 employees
from its Shanghai office to its
headquarters in Shenzhen this move
affects departments such as credit cards
Consumer Finance and financial markets
employees unwilling to relocate are
being offered Severance packages which
many view as disguised layoffs insiders
revealed that the relocation process is
on a tight schedule with all necessary
procedures to be completed within just
over a month however differences in
subsidy policies between Shanghai and
Shenzhen have caused concern among
employees for those with mortgages in
Shanghai moving to Shenzhen means not
only bearing the rental cost there but
also potentially facing a situation
where their income may not be able to
cover the additional expenses as a
result some may choose to resign leading
to what is being called a relocation
style layoff in early May pingon Bank
announced a salary cut for all employees
several employees reported to the media
that their performance bonuses for that
month have been significantly reduced
ranging from 10% cuts to complete
elimination affecting a wide range of
dep departments additionally China
construction bank one of China's four
major Banks has implemented large-scale
salary Cuts causing a strong reaction
throughout the banking industry on July
1st Reuters quoted two insiders stating
that China construction Bank the
country's second largest state-owned
bank had reduced salaries for staff at
its headquarters by at least 10%
shockingly salary cuts for executives
and most Branch staff will be even more
significant a staff member at Shenzhen
branch of China construction Bank
recently revealed to Radio free Asia
that their salaries were cut by 20% at
the end of last year quote branch in
Shenzhen zai dong Guang and other parts
of guandong saw a 20% reduction last
year and some employee benefits were
also lost sometimes we even have to work
overtime end quote a middle level
manager who has worked at China
construction bank for 15 years expressed
his distress we always thought
state-owned Enterprises were secure jobs
we never expected this to happen after
so many years of hard work is this the
outcome the South China Morning Post
reported on April 1st that the 10 major
state-owned Banks collectively slashed
salaries and demanded employees to
return nearly one 100 million UN in
bonuses Bloomberg reported on June 27th
that in response to the ccp's call for
shared Prosperity several of China's
largest state-owned financial companies
have started implementing strict salary
cap
policies sources say that several of
China's largest financial groups have
asked Executives to forgo deferred
bonuses and some fund managers have even
been asked to return salaries from
previous years to comply with a 2.9
Million un pre tax annual salary cap in
recent weeks state-owned Enterprises
such as China Merchants group China
everbrite group and cic group have
communicated these directives to their
employees according to China business
Network citing wind data platform
statistics on April 11th the average
salary reduction for Bank Management in
2023 is 133% with some senior Executives
facing Cuts as high as
40% cicc one of China's largest
investment Banks had earlier reported
significant salary cuts for employees
with basic salaries reduced by 25%
affecting over 2,000 employees last
April cicc had already cut employee
bonuses by up to 40% but such a
substantial reduction in basic salaries
was relatively rare someone commented
and said it seems no industry is spared
whether you're ordinary or extraordinary
everyone is feeling the pressure of
loans High income earners are stressed
and lwi income earners are stressed too
how do we get here not only are major
banks in trouble but the large scale
restructuring of small and medium-sized
Banks also signals unprecedented
challenges for the entire industry
reports indicate that over 80 small and
medium-sized banks have undergone
mergers and restructuring in the first
half of the Year alone shockingly within
just 7 Days of leading up to June 21st
40 rural small Banks were either abs
absorbed or dissolved notably leing
rural Commercial Bank plans to integrate
over 60 small banks in just over a year
a speed and scope rarely seen in China's
Financial history a financial analyst
exclaimed it's like playing a financial
version of the big fish eating the
little fish game but the problem is once
all the little fish are gone can the big
fish survive according to China
Financial stability report 2023 from The
People's Bank of China
there are currently
337 high-risk banks in China with total
assets of 6.63 trillion yen primarily
small and medium-sized Banks given the
typical Under reporting by the Chinese
government the actual number of
high-risk Banks is likely higher than
officially stated an article by The
Economist on July 4th noted that even
during the worst deposit loan crisis
Chinese banks have never disappeared on
such a rapid Pace the report highlight
highlighted that since 2019 several
medium-sized banks in China have
collapsed but the most complex and
problematic are rural small Banks China
has about 3,800 such rural Banks holding
55 trillion yen in assets which account
for 13% of the banking system these
banks have long suffered from poor
management and a large accumulation of
bad loans many have extended loans to
real estate developers and local
governments making them vulnerable to
the real estate crisis
in recent years some banks revealed that
up to 40% of their loans are
non-performing critics argue that
merging dozens of bad banks will only
create larger worse Banks the greatest
concern for the CCP authorities is that
the collapse of poorly performing small
Banks could directly threaten social
stability in 2022 the massive fraud at
Hunan Village in Township Bank led to
depositors to protest on the streets
authorities responded by dispatching
police to maintain order and arrest the
protesters this incident remains
unresolved public concern centers on
whether depositors savings will be used
to cover bad loans or corruption losses
during the bank mergers most depositors
are middle class or elderly individuals
who rely on their savings for retirement
and to support their children and
grandchildren these people benefited
from the ccp's reform and opening up and
are its staunch supporters if their
savings disappear they in their families
will face a survival crisis likely
sparking a strong wave of resistance a
banking Insider revealed that the actual
situation might be worse than official
data suggests with some banks
non-performing loan ratios exceeding 40%
hidden through various means this is
like a ticking time bomb that could
trigger a financial system meltdown at
any
moment for example someone recently
revealed on X how Banks hide bad debts
in the best performing branch of China
construction Bank in Hunan employees are
pressured to meet targets by using their
own money to buy deposits or loans at
the end of each
quarter this time at the end of June
employees were even asked to pay off
overdue loans for customers each branch
was given several thousand un for this
task which was framed as a quote
political Mission end quote despite
finding it absurd and a violation of
employee rights most branches complied
due to Relentless pressure from the
Departments and leaders after completing
the task another batch of similar tasks
was issued some employees who couldn't
afford it resorted to using credit card
loans to pay this distorted practice
highlights how banks have become
increasingly dysfunctional and
exploitative the broader economic
downturn in China has led to the
emergence of professional debtors
forming an industry chain black market
intermediaries collude with bank
insiders to help debtors obtain large
loans fraudulently which are then cashed
out and split among them these debtors
stop repaying become debt beats and
exacerbating the already severe issue of
bad loans in Banks China's banking
crisis acts like a mirror reflecting
various economic problems from local
small Banks to National Giants and from
ordinary depositors to Elite Executives
everyone is struggling to survive the
storm a financial analyst on the YouTube
channel cold ey noted that real estate
and banking are China's two main pillars
the rapid collapse of the real estate
sector which also has Financial
attributes suggests that many loans are
secured against Real Estate as property
values fall and unsold homes increase
these underlying assets become
problematic potentially triggering a
financial crisis many banks have been
dragged down by real estate particularly
mortgage and developer loans and some in
M products this indicates that China's
banking sector is on the edge of a
dangerous Cliff mirroring the broader
economic difficulties the bursting of
the real estate bubble has plunged many
developers into severe debt crises
heavily impacting Banks their main
creditors at the same time slowing
economic growth has reduced corporate
loan demand further squeezing Bank
profits this vicious cycle seems to be
worsening with banks en tightening
credit to control risks which in turn
stifle economic activity an economists
Express deep concern it's like a vicious
cycle without credit the economy can't
recover but if the economy doesn't
recover Banks won't lend it's like we're
walking on a tight RPP and any misstep
could send us plunging into an abyss
Western financial institutions are also
affected by China's economic slowdown
and declining Capital Market activities
leading to significant layoffs in the
China divisions Morgan Stanley recently
announced its exit from banking
operations in Shandon Province including
cha and ginan cities due to
deteriorating non-performing loans
China's economy appears to be in a dire
predicament
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