China hits hard against Henan bank protests, mortgage strike

Recently, customers of small banks in central China’s Hunan province were shocked to find that their COVID-19 health codes had turned red — meaning they’re not allowed to travel — in a bid to curb growth protests against account freezes at the struggling local banks in China.

The scandal is only a sign of the waning middle class confidence in Beijing’s promises of ever-increasing prosperity. Chinese homebuyers are also threatening to boycott mortgage payments on some 320 unfinished housing projects across the country.

Why we wrote this

Social contracts between governments and people must evolve, and China could reach such a point if its economic boom wanes. How will it cope with change while preserving the confidence of the main middle class?

Beijing has pressured provincial governments to deal with the banking and housing crises, in an effort to set a precedent by footing the bill. But some authorities have responded with controversial tactics that further undermine people’s trust in government — such as manipulating the COVID-19 health code system and using plain-clothes enforcers to beat protesters.

“From a party point of view, anything organized that is not under party control is seen as a threat,” said Bruce Dickson, a political scientist at George Washington University. “At local level [changing peoples’ health codes] a smart strategy can be to tackle an immediate problem. But… once you’ve done that, you’ve destroyed so much of public trust.”

Wu Jian’s confidence in China’s local banks started with a click on his mobile.

It was mid-June and Mr. Wu was at home in the central Chinese city of Wuhan, preparing to go to neighboring Henan province to protest the blocking of his accounts by two struggling banks there, which have lost much of the savings. threatens his family.

But when the information technology professional checked his health code — a QR code that indicates COVID-19 risk status — he was shocked to see that it had changed from green to red, meaning he wasn’t allowed to travel. He soon discovered he wasn’t alone – more than 1,300 frustrated savers and consumers across the country, sharing information on China’s WeChat messaging app, had also received unexpected red codes in a scuffle by Henan authorities to stop anti-bank demonstrations. block, which had already broken out in the province.

Why we wrote this

Social contracts between governments and people must evolve, and China could reach such a point if its economic boom wanes. How will it cope with change while preserving the confidence of the main middle class?

“I was quite surprised,” Mr. Wu says. “You resort to these kinds of tricks to stop people — doesn’t that mean you’re not giving us our money back?”

The Henan banking scandal highlights growing concerns about the more than 300 high-risk local banks in China, and it’s not the only sign of declining confidence in a key sector of China’s economy. There has also been a national wave of mortgage boycotts in recent weeks as people stop or threaten to halt payments on pre-purchased homes as part of the now-delayed housing development.

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