The restrictions on money withdrawal are spreading to more and more banks in China. In addition, there are problems in Beijing, Shandong, Hainan and other provinces where bank cards can only be deposited but not withdrawn. Online transfers have begun to be restricted.

According to SOH, in many parts of China, banks have frozen customers’ bank cards under the pretext of preventing telecom fraud and anti-money laundering risks. Even the four major state-owned banks are doing that.

On July 19, a depositor recorded a video of what happened to him.

He has a card from the Industrial and Commercial Bank of China (ICBC). The card suddenly became unusable when he handled a transaction in Sanya city, Hainan Province. He could only transfer money in but not out. 

He went to the Sanya branch of the ICBC, contacted customer service, and was informed that the card was blocked.

The depositor said that the card was unilaterally blocked and controlled by the ICBC head office in Hainan. 

The depositor was told that he must go to the bank counter in Sanya to unblock the card. Otherwise, he can only withdraw money at the counter and not transfer or make payments through mobile banking apps.

This phenomenon also occurred in Beijing, Shandong and other places. Not only the ICBC, but also the Agriculture Bank of China, the China Construction Bank, and the Bank of China are doing the same.

Independent economist He Jiangbing said that the successive restrictions on withdrawals by Chinese banks have severely damaged the confidence of depositors in the banking sector. It has had a great impact on the reputation of local banks.

The economist said that the lenders are most afraid of a bank run, but what they are doing is just fueling that risk.

Many banks are facing a cash crunch, so they use the card locks as a means to limit withdrawals to solve the problem of insufficient cash flow.

Economic commentator Jin Shan believes that phenomena such as difficulty in withdrawing cash or liquidity disruption show that there is a crisis in China’s financial system.

He said that the financial system has poor liquidity and cannot cope with society’s demand for liquidity.

Another reason is the long-term economic downturn. The draconian Covid pandemic control measures have dealt a fatal blow to the economy, making it lose its hematopoietic function.

Now not only small and medium-sized banks, but also small and medium-sized cities are experiencing “difficulty in withdrawing money.”

Jin Shan believes that China’s rural banks and state-owned banks each have their own problems. Though state-owned banks have relatively strong tolerance, they now have finally begun to restrict withdrawals, from setting a withdrawal limit for depositors. 

He does not rule out that the continuous difficulty in withdrawing money could trigger a systemic financial crisis in China.

Before the 20th National Congress of the Chinese Communist Party, the Henan rural bank incident, the turmoil in unfinished real estate projects, and the financial crisis appeared one after another. 

Some people think that the infighting within the Chinese Communist Party is the reason behind it.

Whether these crises could turn into political crises and affect President Xi Jinping’s re-election are issues that have been closely monitored recently.

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