Chinese Economics Thread
- Thread starter Norfolk
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AssassinsMace
Lieutenant General
I wonder if there's a clause if Airbus denies engine parts, China is owed a full refund. Remember they were talking about how the US can order banning airline engines to China like semiconductors.
What's going on with the situation in Henan province regarding the people unable or being stopped by their local officials (cops) to withdraw their money alleged amount totalling ¥40 BILlion. And some or many based on posts on weibo (that's now been taken up by perpetual Reddit China human rights watchers) people's covid-19 status are given red code so that again they won't be able to withdraw their said money.
Since I don't know the entire details as to why this is happening, what are causing for people to withdraw their money (out of panic? Out of fear from the impending China collapse that has finally permeated in the minds of many in that said province) why are the chosen measures taken by the local and provincial government seem on the surface a little strict and to many unfair, and worst inhumane etc...
@yungho @zhangjim @KYli and to our brothers and sisters that are closer on the ground if possible please explain what the situation is based on your individual perspectives and if you agree to what the government are doing please explain your support, if not why not? And what are the proper measures that ought to have been made or must be made to ease the concerns of the people that are affected.
Since I don't know the entire details as to why this is happening, what are causing for people to withdraw their money (out of panic? Out of fear from the impending China collapse that has finally permeated in the minds of many in that said province) why are the chosen measures taken by the local and provincial government seem on the surface a little strict and to many unfair, and worst inhumane etc...
@yungho @zhangjim @KYli and to our brothers and sisters that are closer on the ground if possible please explain what the situation is based on your individual perspectives and if you agree to what the government are doing please explain your support, if not why not? And what are the proper measures that ought to have been made or must be made to ease the concerns of the people that are affected.
It's a private small town bank. 4 of them. They lured people with high interest rates then the owner skipped the country with the money. 40billion yuan.
Apparently it was like a Ponzi scheme but in a small bank form and told people he was investing overseas.
He left the country but his assets and bank are frozen. Hence why people can't get money out.
Apparently the govt has promised to repay people's lost savings Since the bank was insured town certain degree.
Just to put it in context the town's operating with this bank are considered small villages.
Hope that helps
A major shareholder of a few rural banks using third party(online fintech services) and online banking mini apps to lure people with abnormal high interest rate to deposit money into certain apps that associate with the banks. That major shareholder with the help of the banks and other fraudulent companies and people siphoned that money into his companies and accounts.
A bank executive of one of the rural banks found out about such scheme and reported to the China banking regulator which resulted in investigation. That major shareholder has many pending cases against him before this incident. He fled China before the arrest. His assets were frozen but no one knows how much money he had gotten out of the country.
People in Henan or other places that have deposit in those rural banks that opened with online mini apps got their money frozen. That is why your have so many people protesting and demanding their money back. However, the bank regulators are still investigated the extent of the losses and verifying the legitimacy of those deposits.
In the end of the day, most of these deposits should still be protected by the China banking insurance due to the fact that these rural banks have been deeply involved in luring these deposits. Even though such deposits were lured by greed and ponzi scheme.
I don't see a problem with what the banking regulators are doing. No one has any idea of the extent of the losses, verifying the legitimacy of deposits take times, and frozen assets of people involved in the Ponzi scheme needs time to evaluate their worth. By freezing the withdrawing of the depositors, you allow the rural banks to operate and continue to serve clients that weren't lured by the Ponzi Scheme.
However, it is clear that the central government regulator delegates the responsibility to the province regulator to fix the issue as they don't want to involve. The province regulator is dragging their feet and moving very slowly to resolve the debacle for fearing making any mistakes and taking in unnecessary risks.
I want to say is that Xi ordering internet giants such as Alibaba and Tencent to end their indirectly fintech service is exactly needed to fix this issue. Last year, the China banking regulator also banned rural and city banks from luring clients from other provinces online. Companies such as Alibaba sold such products and services and take a fee from these banks without any risks and responsibilities. When things went south such as these rural banks, the government would be the one that needed to absorb the losses.
Another thing is Evergrande invested in NE rural bank that lent huge amount of money to Evergrande. It is lucky that the Chinese government found out early and force Evergrande to repay back some of the loan first.
Also the depositors are not blameless. I still remember how many times my dad was offered many financial products from banks and others with 5-10% returns which I told him never invested in such products. Many of such products of insurance, P2P, high interest CDs are all risky investment or Ponzi Scheme to begin with.
Another example why domestic market needs to be properly unified. Although it sounds cool in theory to have a gazillion small banks, in reality you want consolidation so that the stakes are bigger, they can be more thoroughly regulated/checked by the government, company structure is more formalised and legalised, more professional services offered etc
Imagine being a (usually understaffed) regulating department and being told to regulate a billion small banks all over the country (or incapable regional departments). Literally mission impossible.
Added to the fiasco was that someone in the local government(s) abused their power. They somehow sabotaged the Covid Badge mobile app for Henan and wrongfully assigned red code to many depositors, and even non residents who just had come cross their paths with the depositors, to keep them from gathering to protest and 越级上访 (a process for the citizens to file complaints against their local goverments).
This is a very serious breach of trust. But the Henan provincial government did not respond swiftly. Multiple branches passed the ball back and forth. Eventually a few small potatos were tossed over the fence and got a slap on the wrist for the sabotage. But it is widely believed that they are just scapegoats.
On the other hand, even if these small potatos were indeed who sabotaged the Covid Badge mobile app and did it on their own (I personally doubt it), it showed how vulnerable such critical infrastructure is and how poorly the system is managed.
Either way, it does not look good for Henan.
I mean, there's like a 95% trust in the central government and 70% in local government, according to a harward survey I believe, so yeah, this seems like one kind of reason/event that validates that lol.
With that said, I do think it will get 'fixed', although changes usually come a bit late/slow.
The covid app is pretty decentralized so it wouldn't take much to red flag the protesters. Not saying someone in the higher up didn't order it but it could also be some small potatoes that feel it needs to do something to prevent the protesters embarrassing the higher ups. At the same time, I am pretty sure someone in the higher ups is shielding the New Fortune Group from prosecution and arrest. Otherwise, that guy would have been arrested and prosecuted long time ago.