Recently, bank runs have happened across China. It started in central China’s Henan province earlier this year, and spread to east China’s Shanghai, south China’s Shenzhen, north China’s Dandong, and central-east China’s Jiujiang.
Some banks will only serve a limited number of customers per day. Some banks limit each customer’s withdrawal to no more than about 149 dollars. Others closed their branches and even the ATMs are reportedly empty.
And now, China’s largest third-party mobile and online payment platform, Alipay, is facing a bank run. According to iResearch Consulting Group data from 2020, Alipay accounts for over half of all transactions on the mainland.
One latest case involved “Yue Bao,” a cash management platform within the Alipay application.
Mr. Yu, a resident from Harbin City, Heilongjiang Province, told Chinese language media Xin Tang Ren his experience, “I can transfer in from Yu’ebao, but not take it out.”
Mr. Yu said he deposited about 69 thousand dollars of savings into Alipay. But recently, when he tried to withdraw the money, he could not do so. The customer service said it would take nearly three years to withdraw the money. The account freeze makes Mr. Yu unable to repay the mortgage. He also had to borrow money from friends to pay daily expenses, making life extremely inconvenient.
Although Mr. Yu’s problem was finally resolved, many reports of cash flow problems in China’s financial system have made depositors tremble with fear. They worry that their hard-earned money might be lost. This shakes people’s confidence in the financial system.
Chinese authorities on Wednesday announced that they had punished several officials involved in the case. Specifically, the Henan provincial government said that Feng Xianbin, deputy secretary of the Zhengzhou Municipal and Legal Committee, was dismissed, and his deputy Zhang Linlin was demoted. According to the authorities, the two men decided, without authorization, to assign red health codes to some depositors who went to Zhengzhou to protest. Three other officials were also given administrative fines.
However, the public does not trust the outcome of these actions. They responded that the government was shifting blame and shirking responsibility for overseeing the related authorities.
One netizen said: “Where did the people from the Political and Legal Committee get the information on bank depositors? To what extent has the public’s privacy been leaked out?”
Although bank runs are unusual in China because most banks are state-run, it has been happening in the world’s second-largest economy for over a week now.
Wang He is a U.S.-based China affairs commentator. He told The Epoch Times that the bank-run issue could not be solved because China’s economic system is in crisis.
Zheng Yongnian is one of the economic advisors to Chinese leader Xi Jinping. Earlier this month, he published an essay pointing out that China’s economy is facing critical challenges. Over half of the foreign investments have left China, and China’s private businesses are struggling to survive due to a supply chain crisis and lack of liquiity.
Zheng’s essay was censored not long after it was published.