China's Bank failure has just begun: Freeze bank cards, limit withdrawals/The Financial Crisis comes

based on information released on august 26 by the cbirc the china banking and insurance regulatory commission the commission has allowed two rural banks in liaoning province to enter bankruptcy proceedings which is tantamount to officially declaring the bankruptcy of the two grassroots village banks at the same time a growing number of personal bank cards and even corporate accounts are being frozen in china and the situation is also spreading in china's first-tier cities have you seen this news recently some bank accounts of people in xinjiang have been frozen staff at the shenzhen branch of the bank of china claimed that to prevent telecom fraud a freeze was imposed on accounts there had no activities for the last three month or six months or that had large amounts of bank transactions for the recent period let's take a look at the two local banks in bankruptcy their branches personnel and deposits were taken over by shenyang rural commercial bank co limited one of the bankruptcy banks liao yang rural and commercial bank had total assets of 165.3 billion remnb or approximately 24 billion us dollars as of september 2019 assets of the inherited shenyang rural and commercial bank totaled 9.4 billion u.s dollars at year end 2021 or less than half of the assets of the original insolvent bank the former president of liaoyang rural and commercial bank was suspected of accepting bribes and making illegal loans of more than 4.3 billion us dollars he fled the country in march 2021 and was repatriated in october of that year since 2021 liaoning province a declining industrial province in northeastern china has imposed detention and criminal coercive measures on 63 small and medium-sized bank executives these two collapse banks and liaoning can be seen as part of the current systematic crisis of local banks in china on july 6 2022 the official website of the banking and insurance regulatory bureau of hubei province issued an announcement approving the disillusion of two local banks before the two failed banks in hubei there have been cases of failed village banks in other regions in 2022 as well in china's banking industry crisis low-grade village banks are at the forefront since mid-april 2022 several village banks have been exposed for having their customers deposits frozen without warning chinese media reported that at least four village banks in hunan province and two village banks in anhui province are involved in this round of village bank crashes some of their depositors are from other provinces the case involves about 413 000 depositors and potentially more than 5.7 billion us dollars in deposits in handling the crisis of local banks health codes born out of the epidemic have played a big role the hood on government has made depositors health codes red so they can't go out to collect their money my wife is one of the depositors i am not when my wife scanned her health code it became red when i scanned the code nothing happened this is the hanan government using this dirty tactic to prevent depositors to go to hunan to collect their deposits we have been together over the past few days we haven't been separated our itineraries are all the same the only difference is that she is one of the depositors and her cell phone number and identity card number are in the bank's database in hanan i am not a depositor i only accompany her here so my code is green two days ago on august 29th the shuchang city public security bureau of hanan province reported the investigation update concerning the village bank case it said 234 suspects had been arrested but the chief suspect liui was still at large previously this public security bureau announced that the suspects used third-party online platforms to market financial products and illegally transfer funds in the form of fictitious loans the chief suspect involved luiz was rumored to have fled to the u.s the chinese media reported that his influence was so huge that in addition to the six village banks at least 26 other banks were inextricably linked to the new fortune group controlled by him that is to say through equity pledge financing and other means these banks have been used as tools by major shareholders to siphon money however the chinese media didn't disclose to which of the ccp's elites liu yi was working for as a white glove for china's elite a white glove is an intermediary who launders the money and handles the dirty deeds while the elites keep their hands clean although it's reported that bohai trust an investment management company based in shirjajuang hubei province had repeatedly lent loans and emergencies to new fortune bank in 2017 when new fortune group's capital chain was in danger of breaking bohai trust is a subsidiary of hna group co limited a chinese conglomerate once listed on the fortune global 500 but declared bankruptcy in 2021 such information suggests that louis is deeply connected with the government system therefore some netizens questioned what's the use of letting the big boss go and catching a bunch of minions according to the information published by the china banking regulatory commission in addition to the six state-owned banks and 12 national joint stock banks china has 1 651 village banks 1596 rural commercial banks 577 rural credit cooperatives and dozens of rural cooperative banks and rural capital mutual aid societies fitch group an american credit rating agency reported that small regional banks account for about 30 percent of the total assets of the banking industry in china why have local banks suddenly blown up in 2022 it is closely related to the so-called internet finance that has developed so widely in china in recent years as well as to the sudden collapse of china's real estate economy and the overall economic downturn and systemic risk from 2012 to 2015 the chinese communist party or ccp made a big deal of internet finance many small and medium-sized banks took deposits and loans across regions on a large scale through internet finance which increased their operational risks such local joint stock banks have a complex ownership structure leaving banking executives with huge room for misappropriation of funds and misappropriation of state assets as in the case of a ponzi scam these banks took the new money they got to cover the money that came in before when china's economy tanked less new money came in but old money had to be paid for and settled so those banks started to blow up one after another china also has a deposit insurance system but now it seems that those village banks that collapsed don't seem to be covered by the system if these banks go bankrupt the deposit insurance companies aren't required to pay that is to say the money deposited by the people has very little protection and the ccp is currently using vague language to cover up this secret the lack of protection is evident from the recent handling of the hunan village bank case in the face of the depositors who cannot withdraw their money the government is suppressing them with one hand and paying them in installments with the other since july 5th 2022 the hunan provincial government has started to make payments in three batches authorities divided these depositors into groups of less than fifty thousand renminbi less than one hundred thousand remnb and less than one hundred fifty thousand remnb allocating them from small to large amounts however many depositors told overseas chinese media that only a small percentage of the depositors got their principle in the first three installments at the time they already had a hunch that the officials were using delaying tactics and that those who had deposited five hundred thousand rmb or about seventy thousand us dollars and one million rmb or one hundred forty five thousand us dollars would not be able to get their principal back in full sure enough on august 29th the hunan banking and insurance supervision bureau issued an announcement saying that those who had deposited more than 70 000 us dollars would be given advances of 70 000 u.s dollars and the rights and interests of the unpaid portion would be withheld that is to say if you deposited 150 000 u.s dollars you would now only get back 70 000 us dollars which is still only what was announced the reality is not yet known it is foreseeable that the harsh complicated procedures and the long wait will exhaust the confidence of these large depositors who will eventually accept the results given by the government one victim of the village banks in hunan described a girl in their social group she was originally from inner mongolia and is currently in a particularly bad position as the public security authorities in henon have been looking for her trying to convict her of some sort it's likely because her family has large deposits more than three hundred thousand u s dollars as the family had deposited all their money in those banks village banks in china are set up in the form of joint stock companies by local governments and local joint ventures in accordance with the guidance of the china banking regulatory commission the government should have compensated the depositors according to the banking law the chinese government has used the term advance in their payments to the depositors it's very misleading it sounds as if the government is here to bail out the depositors and has no responsibility of its own it is foreseeable that there will be more and more incidents like the village banks in hunan province freezing depositors accounts and the bankruptcy of rural banks in liaoning province in china for the general public it is now more risky to keep money in the bank in addition to bank failures and bankruptcies we mentioned at the beginning of the episode that banks across china have frozen a growing number of bank cards which serves as an obvious sign the chinese media china business network reported that in mid-august some chinese bank depositors couldn't withdraw cash via wechat and couldn't transfer money via alipay and their accounts had been frozen despite claims from the banks that it could be resolved online through banking apps many people still had to go to the bank counter to unlock their accounts and many banks have a daily limit on the number of people who can do so today at noon i have a customer who used wechat to settle a 10 000 remnb bill with me but the transaction didn't work he asked his wife to pay me by wechat i added his wife's wechat but i was prompted that the transaction was restricted and no transfer allowed i had no choice but to ask his wife to add staff to my company to finish the transaction i called wechat customer service to ask what happened in the past two days since there had been transaction restrictions everywhere the customer service replied that if the transfer between a newly added friend and you were frequent wechat would restrict the transfer i was really angry in addition to the bank of china many other banks such as construction bank industrial and commercial bank and postal savings bank of china also have similar restrictions outside their branches long queues of depositors requesting to unfreeze their accounts have begun to build up a spokesman for the bank of china explained that the public security authorities had asked banks to check the accounts and freeze the cards once funds were found to be at risk this explanation is difficult for the chinese public to fathom for a long time banks have been the most trusted place for chinese people the reason why people deposit their money in banks with confidence is that banks guarantee the safety and stability of deposits and immediate cash withdrawals however many chinese people have suddenly found it very difficult to take out cash or perform certain transactions at the bank here a man took his bank card to change his pin but the staff asked him to provide his real estate and medical insurance certificates before changing the pin the man was very upset with the bank's outrageous demands these are all signs that have led to suspicions that banks in china are facing a cash crunch and are using card suspensions as a means of limiting withdrawals to solve the cash flow problem in many chinese cities banks only allow people to withdraw 1000 rmb or about 145 us dollars of cash at any time the situation has become increasingly serious in china recently i went all the way to the bank to withdraw cash on such a hot day the staff told me that i could only withdraw 1000 women b at a time it might be justified if i were to withdraw a large sum of money and you told me there might be a capital risk or if my money was transferred from several commercial banks to another company then i would also concede that the money couldn't be taken out but you told me that i could only withdraw 1000 rmb at a time this is too much what is the use of such a small amount of money what if my family member was in the hospital and needed money urgently people used to trust and count on you the bank but you are losing our trust every step of the way when we deposit money you try to get us to buy financial products and you go to great lengths to set our thresholds for those who don't have money the banks also have ways to let this person get a credit card and let people consume in advance my bank has somehow been limited again i can only take a 1 000 rmb a day today i needed to buy formula for my son six tubs for almost 2 000 rmb so i wanted to pay using my bank card i made sure i was ready to pay and then the car gave me a prompt that i could only wish draw 1000 rmb daily it pissed me off i went to the app but couldn't find what the problem was i don't understand why i didn't set any limit myself how come the card only allows access of only 1 000 rmb a day i came to get cash today but when i arrived at the bank none of the four atms could dispense cash all of them don't support cash payments i felt helpless i came to the bank's atms across from times square and not surprisingly both of them were broken the four largest banks agricultural bank of china bank of communications industrial and commercial bank and china's taxation building in the busiest locations banks are all closed what happened to the bank of beijing so many people are lined up to get money just now so many people are lined up this time there are fewer people now my bank card at the construction bank is locked again i went to the bank to take care of it recently many people go to the bank to do this and you need to make an appointment the day before yesterday when i went to the bank to unfreeze my card they asked me many questions i understand it's for the safety of everyone's money but some questions are pretty over the top for example they wanted to know what i want to trade and the bottle of water i bought he asked for all the details also there was a limit of one thousand women b if you want to repay a home loan or a car loan you have to provide documentation otherwise without special reason there's a limit of one thousand rmb a day there's no alternative to do it as the bank requires it's closed today let's check it out this year's situation is that even the bank won't open wow it's locked look a big hole smashed in the door there's supposed to be an atm but it's a huge mess right now the risk of bad debts accumulated by chinese banks over decades has suddenly been turned up in connection with the bursting of the real estate bubble in china the collapse of the capital chain of the real estate industry in the ponzi scam led to the collapse or semi-collapse of dozens of related industries with the financial sector being the most impacted similarly the chinese government has yet to find a solution to the problems in the real estate sector especially the collective refusal of homeowners to repay their mortgages in the face of unfinished buildings or rotten tail buildings as chinese people call them [Music] thus recently the ccp has been cleaning up the banking system on a large scale as a result it has seen many officials being purged chinese official media reported on august 23 2022 a former deputy governor of the china development bank was tried in a beijing court on charges of taking bribes issuing financial instruments in violation of the law issuing loans in violation of the law and hiding deposits abroad the senior bank executive was the first official to be labeled by the chinese government as having caused significant financial risks but the public found that the bribes he received added up to just over 60 million remnb making him a sort of good and clean cadre among communist party officials senior communist party officials have corruptly obtained hundreds of millions or tens of billions of remnb so such an amount isn't much to the chinese people the fundamental solution to the problem in the banking sector requires that all kinds of enterprises in china especially the massive real estate sector are generally in good shape and are able to pay their debts and interests in such a situation the chinese economy would show good momentum but now the chinese economy as a whole is in decline and the dominoes of economic collapse have begun to tumble i hope that at today's meeting all comrades and leaders will take the lead to buy a home if you have bought one set buy two sets if you have bought two sets buy three sets if you have bought three sets buy four sets here i announce the opening of the sherman county real estate exhibition and trade fair [Music] is this kind of campaigning effective for the ccp officials of course it's just a performance the ccp is holding bank executives accountable hoping to clear the mines as soon as possible but the purpose of such clearance is not to save the banks and resolve the survival of the chinese people but to save the red regime itself [Music] you