The authorities of the Chinese province of Henan brought tanks to the streets to pacify the protesting deceived depositors, writes the Indian edition of The Economic Times.
The need arose after clients of three smaller banks – Yuzhou Xinminsheng Rural Bank, Zhecheng Huanghuai Rural Bank and Shangcai Huimin County Bank – were unable to recover their deposits. The total amount of blocked funds amounted to six billion dollars.
The management of the banks and the provincial authorities promised to begin payments on July 15, but only a small number of depositors were able to receive the money.
Experts attribute the current situation to the crisis in the Chinese real estate market, which is one of the foundations of the economy of Henan province. The local budget receives a significant share of income from the sale of land to developers, but in recent months many projects have been frozen, and banks have faced massive defaults on mortgage loans and loans issued as part of project financing to developers. This, in turn, led to a shortage of bank liquidity and the inability to repay obligations to depositors.
The media is already comparing the appearance of tanks on the streets of Chinese cities with the suppression of protests in Beijing’s Tiananmen Square in 1989, which has become one of the symbols of brutality against the protesters.