The freezing of over a million deposits by Chinese banks has sparked outrage

According to Liberty Times Net, all deposits in Yuzhou Xin Minsheng Village Bank, Shangcai Huimin Village Bank, Zhecheng Huanghuai Village Bank, and Kaifeng New Oriental Village Bank have been frozen since April 18, resulting in several protests in Zhengzhou, Henan’s capital.

Today we will discuss sorting out the whole process, its key points, and the most critical “red code.”

Henan’s incident is a two-stage financial scam 

As reported by Bloomberg, Henan (Hénán) is accused of abusing its Covid control measures to keep depositors from returning to the city to protest.

Depositors claim they are defrauded from billions of dollars in suspected financial fraud. In addition, several people have reported being denied access to their deposits through online platforms.

Their health codes are now arbitrarily manipulated and turn red when scanned in Zhengzhou, Henan province.

Columnist Tang Jingyuan was interviewed by the Chinese-language media outlet Da Ji Yuan. He said public opinion broke out after Henan authorities placed all depositors on the red code.

The first stage occurred on April 18, when the village banks in Henan abruptly shut down their online deposit and transfer channels without warning due to what they said was a system maintenance upgrade.

After that, village banks in Henan and Anhui were also found to be preventing depositors from withdrawing their money. 

The disappearance of bank customers’ deposits caused panic among depositors.

According to Tang Jingyuan, Henan authorities suppressed these actions. Therefore, more depositors went to Zhengzhou to defend their rights.

How many people or organizations were affected? 

Caixin has a report regarding the number of depositors affected by the incident. On June 12, Henan continued changing depositors’ health codes to red.

It affects victim depositors who visited or didn’t visit Zhengzhou.

According to Caixin’s previous understanding, the four rural banks in Henan and two rural banks in Anhui with closed online systems had approximately 413,000 online depositors. This number includes foreign depositors. 

Both Sina Finance and Da Ji Yuan reported the money involved is 40 billion yuan (around 6 billion dollars).

Along with the residents, some local real estate owners are encountering issues regarding the red code. For example, some owners of unfinished buildings, such as Zhengzhou Mingmen Cuiyuan and Kangqiao Jiuxi Garden in Zhengzhou, Henan, had been assigned a red code in the rights protection process.

Before the red code could be changed back to the green code, they had to apply for a green code change and guarantee that they would not defend their rights.

Sunac Zhongyuan Daguan’s project was reportedly stopped before they finished it. They also encountered the “red code” problem working with the Chinese regime. 

Another project that encountered the same issues is the Zhongyuan Grand View in Zhengzhou. Their properties are unfinished business because the construction has been suspended for eight months.

The owners of both the Sunac Zhongyuan Daguan and Zhongyuan Grand View projects reported to the Bureau of Letters and Calls many times. However, as Sina Finance reported, one owner’s health code suddenly turned into a red code. Kangqiao Jiuxi Garden in Zhongyuan District, Zhengzhou, also received a red code when they reported the problem.

What netizens say about the ‘red code’ incident.

As Sina Finance reported, netizens have some comments about the “red code.” 

A user on Weibo commented that it was illegal to assign red codes to depositors of rights protection at will.

Another person named Xia Ke Dao said that they should be held seriously responsible regardless of which department or who initiated it.

According to a Weibo user named “Xiaobai not xiaobai,” indiscriminate use of the red code hurts the people’s confidence in Henan’s governance. It also affects the everyday use of the health code and the information security of residents and delays the overall national prevention and control situation.

 Who is responsible for this occurrence? 

On June 7, Song Weijun, a researcher at Tianjun, told Chinese language media outlet Da Ji Yuan that Henan’s New Fortune Group was a trader behind Xuchang Rural Commercial Bank.

According to Song Weijun, Henan’s New Fortune Group allegedly infiltrated 13 banks and absorbed public funds through various methods. 

A rural bank had problems withdrawing funds after the New Fortune company was deregistered.

The company reportedly closed online withdrawals, transfers, and other funding methods two months after the organization was deregistered.

How was the whole scam conceived

Third-party online platforms such as Baidu’s Du Xiaoman and Xiaomi’s “Tianxing Finance” may be involved because depositors use these apps to make deposits.

To put it bluntly, the new wealth group, bank executives, shareholders, and other insiders conspired. They collaborated to construct a fake system that met the China Banking and Insurance Regulatory Commission’s requirements.

As the Liberty Times reported, these platforms generate revenue by routing payments to non-bank accounts, such as shareholder accounts, rather than bank accounts.

Bribery cases at Henan banks

The reason behind the recent bank incidents in China is bank corruption. However, many Chinese officials have been involved in different cases. 

For example, the Paper reported the case of Qiao Jun’an, former vice president of Zhengzhou Commercial Bank. 

The Paper cites the court findings. Qiao Junan, as a state functionary, took advantage of his position to seek benefits for others and solicited and illegally accepted about 31.2 million yuan (4.6 million dollars) of other people’s property. 

He was sentenced to fixed-term imprisonment of fourteen years and received a fine of 4 million yuan (around 597 thousand dollars). 

According to the Chinese language media outlet Da Ji Yuan, Lu Yi was the chairman of New Fortune Group. 

In February, in the bribery case of Cai Esheng, vice chairman of the China Banking Regulatory Commission, Lu Yi assisted in the investigation. However, Finance Sina reported on May 31 that he fled to the U.S. after his release when the rural banks started suspending deposits.

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