Skip to content

The Run on Chinese Banks Being Ignored Around The World

Note: This article may contain commentary or the author's opinion.

Bank runs happen when people scramble to withdraw cash from banks in fear of collapse, much like they did during the stock market crash of 1929 and again in 2008 when the banks needed to be bailed out by American taxpayers.  In the worst cases, banks’ liquid cash reserves are exhausted,  not everyone gets their money,  and the bank defaults.

In Asia, bank runs are also rare.  In 1927, a run on Japanese banks led to the collapse of many banking institutions across the country. The banking crisis of  Myanmar (formerly known as Burma) led to that country’s near financial collapse from which the country has never fully recovered. 

Since the  Great Depression though,  none has been as significant compared to what is starting to unfold in China right now.

The people of China have been losing faith in their banking institutions in recent years. Harsh and unnecessary Covid lockdowns in 2020 and again in Shanghai recently, have also added to the rising tensions among Chinese citizens, as well as the collapse of the China Evergrande which left many Chinese citizens facing the possibility of losing their life savings which had been used as deposits for housing.

“Return our money” could be heard from Evergrande protestors as they chanted at Evergrande headquarters in Shenzhen in 2021.

Multiple sources contacted by Asia Markets confirmed that deposits from the following institutions have been frozen since Mid-April of this year:

"*" indicates required fields

Should Joe Biden resign?*
This poll gives you free access to our premium politics newsletter. Unsubscribe at any time.
This field is for validation purposes and should be left unchanged.
  • Yuzhou Xinminsheng Village Bank (located in Xuchang City, Henan Province)
  • Zhecheng Huanghuai Bank (City of Shangqui, Henan Province)
  • Shanghai Huimin Rural Bank (Zhumadian City, Henan Province)
  • New Oriental Village Bank (City of Kaifeng, Henan Province)
  • Huaihe River Village Bank (Bengbu City, Anhui Province)
  • Yixian County Village Bank (Huangshan City, Anhui Province)

Banks that have branches across the Henan and Anhui Provinces issued announcements in April, stating they had to suspend online banking to their customers due to system upgrades. But at the same time, clients were reporting that their electronic deposits into their online accounts, mobile apps, and third-party platforms could not be withdrawn. This led banking clients to rush to their local branches to try to withdraw their funds, only to then be told that they were not able to withdraw their money. 

By the end of last month, images started to emerge on Chinese social media of demonstrations at the front of several bank branches. 

Run on Chinese banks

 

According to a user on the Chinese social media platform WeChat, the protests continue to mount, but are rarely mentioned in the Chinese press or anywhere else around the world. “It has caused widespread concern on the internet but the media attention is not high, the highest degree of concern is the four banks in Henan.”

On Twitter, a video of a large line can be seen at an ICBC Bank in China (one of China’s largest state-owned banks)  which was posted on Tuesday, June 9, and suggests that contagion is in progress.

Translated to English, the tweet reads, “The bank card system is locked, and these people are here to unlock it. Massive runs are coming.”

“All banks in Shanghai have restricted depositors from withdrawing money… A bank run is about to sweep China,” according to Chinese blogger, Jennifer Zheng. 

The lack of concern or any reporting of this around the globe is alarming at best, as this growing financial crisis should concern nations worldwide.