China’s Ponzi banks are teetering

What began as a run on a handful of provincial banks is rapidly morphing into one of China’s worst financial scandals, threatening the stability of the country’s heavily indebted financial system. It poses a serious challenge to a Communist party obsessed with social order, which has thuggishly cracked down on desperate depositors demanding their money back.

At the weekend, protesters in Henan’s capital Zhengzhou were charged, beaten and dragged away by unidentified security officials dressed in white shirts and dark trousers, who appeared to be working in concert with uniformed police. An estimated 1,000 angry depositors had gathered in front of a branch of the People’s Bank of China, carrying banners that read ‘We are against Henan government’s corruption and violence’ and ‘No deposits, no human rights’. They chanted, ‘Henan banks, give me my money back’ and one protester reportedly pasted pictures of Mao Zedong on pillars in front of the bank.