Shortly after April 18th 2022, on Chinese social media, people started to see complaints that people could not withdraw money from their bank accounts. They all had something in common: they opened their bank accounts with a few rural banks, most of which are in Henan province. Most of them opened their bank account online, through websites such as Duxiaoman (owned by Baidu), JD Finance (owned by JD), BinHai Finance (owned by China Life Insurance Company, China CITIC Bank, Topsperity Securities and Tencent). The have put their money in the banking system through the most secure way via those official online platforms. They thought it was just like any other bank account, until they found out that they could not withdraw money any more.
Initially, the depositors found out that they could not withdraw cash from their apps. When they called the bank to ask, the banks claimed that it was just system maintenance.
Within days, the media already had a company and a person (with Cyprus passport) to blame. Allegedly the company, Xincaifu, that invested in the banks, was doing “illegal fund raising”. Somehow, that implies that the depositors themselves were to be blamed for taking high risk. “Illegal fund raising” is a financial scam that have ruined many families in recent years. But many depositors refused that explanation. They genuinely thought they were depositing money into a bank, with an insurance of up to 500,000 Yuan limit by the state government (the central bank).
By the end of May, media reported that only local depositors (people with ID card from the local government) could withdraw money from their accounts in local branches. There are 400,000 depositors with a total deposit of 40 billion Yuan (a bit less than 6 billion USD) in these four small rural banks. The government has started financial investigation, and Xincaifu is the criminal here. According to the media, Xincaifu have cancelled their company registration in February and transferred the money overseas. The depositors will have to wait till the end of the criminal case for any financial compensation.
Meanwhile, according to media outside China, depositors tried to protest in front of the government offices, they only got police beating, arrests and pepper sprays.
Then, some depositors who live and work in other parts of China, thousands of kilometers away from Henan province, woke up one day and found out that their health code turned red, making it impossible for them to take public transportation to go to Henan, and worse yet, many of them could not even go to work.
Somehow, the public who is numb over tragedies of “illegal fund raising”, found the abuse of health code super scary, and that gave the depositors who lost billions of yuan a chance to make their stories clear to the public. One Chinese media actually managed to find some of the victims and published a few stories about them. What follows is a translation of some of them. You can read the original report archived outside China here
Zhang Xingxing used to be an accountant. Now, she is a single mother. Ms. Zhang had lupus for many years and could not work full time. She used to live with her parents and her son. In 2020, the government paid them 1 million Yuan to demolish their apartment for new projects. Ms. Zhang could not afford to buy a new property, so she is renting. She decided to put the money in the rural banks because, like many Chinese, she believes that banks belong to the state, and state is always trustworthy. As an accountant, she understands that if anything goes wrong, the state will pay up to 500,000 Yuan insurance per account. So, she had two accounts in two different rural banks. The interest rate is about 4%, relatively high. She thought she was quite smart.
Since April 18th, she is under overwhelming stress. She started to have high blood pressure, and is losing her eyesight. She could not sleep at night. She went through eye operation with money lended to her by her sister but her eyesight did not recover. When other victims are going to Henan to protest, she could not go, she is scared that she either would die on the way, or worse, would end up paralyzed on the way. Her son is going to university this year. He is too young, Ms. Zhang said.
Ye Feng is in the construction business in Zhejiang. He made his fortune through hard work since he was a teenager. He was smart and eventually made it with his own factory. When he had 40 million cash, he felt very secure. He never played in the stock market, and when P2P (the previous financial scam that blew up and sank billions of yuan from ordinary people) was very popular in China, he was not interested. A friend of his introduced him to the rural banks of Henan. This time, he did not hesitate, because this is a “bank”. He thinks like Ms. Zhang, and like everyone else in China.
Many people understand that, in China, the smaller the bank, the higher the risk, so you get higher interest from the small banks. This is also “common sense” that the more you deposit, the higher the interest rate. So, Mr. Ye has got 9% interest rate from his deposit. And many depositors from rich provinces like Zhejiang and Fujian had interest rate higher than 10%.
Not only people like Mr. Ye, but also many younger people, the 80 and 90 generations, put their parents assets into the rural banks, and now, they also have lost everything.
Rural banks were part of the banking system in China that was designed to attract capital for development of the rural areas. It grew very fast in the past few years, resulting insome very high risk banks. Mr. Ye think this is the issue of the banking system, who let the rural banks become a new financial scam. Now, Mr. Ye, who is 47, lies in the living room floor with tears streaming down his face. His wife said that she had never seen him crying before. He had worked so hard that his health was ruined, now he understood that he would never be able to make this amount of money. He has lost the will that kept him working before. He has stopped his business all together.
Thanks to the abuse of health code, everyone realized that this is not just another P2P-like scam. The credibility of the banking system is at stake. Smart know-it-all social media users started speculating what actually happened, how the system failed to regulate and monitor those banks. Blaming Xincaifu does not seem enough. Even if Xincaifu is the criminal here, by allegedly investing in the banks and then taking out massive loans from them, it should be the banks going bankrupt and the government taking over the accounts and return the money to the depositors.
Like Ms. Zhang said to the media, “they would like to say that our bank accounts were fake and not under insurance but they could not, because there was absolutely nothing wrong with our bank accounts. But they will not acknowledge it. No one answers to us.”
According to BBC, Susu, who real name is Lu Ke, was arrested.
Malawian police last week launched an investigation but were unable to arrest the Chinese filmmaker as he could not be found.
Department of Immigration and Citizenship Services spokesman Pasqually Zulu confirmed that Lu Ke was arrested in neighbouring Zambia, in the eastern town of Chipata.
Mr Zulu said the two countries were now liaising to have the Chinese national sent to Malawi for the authorities to continue their investigation.
Susu’s last Weibo post was June 19th, “Happy father’s day”, it says.
June 18th is a big day for e-commerce in China. If you have heard of the Nov 11 shopping festival, invented by Alibaba, you might want to know that it is not the only one of the year. June 18 is another equally huge shopping festival, invented by JD.
Li Jiaqi has been under contract to sell products worth of billions of Yuan on this occasion. His fans were waiting for his come back. He did not. You can read Newsletter 67 for the reasons.
So, to all his fans, he is not coming back, ever.
Diablo Immortal is set to release its online version in China on June 23rd. However they just announced a delay. It caused the stock price of the company Netease (who co-developed it with Blizzard) to go down 10% in the HK market.
Why? No one believe what the company said, a need for more optimization and adjustment, as the real reason.
People also found the game’s official Weibo account was silenced. How can you promote your product in China without a Weibo account? And why is the account gone?
Some people were speculating a Li Jiaqi moment. And indeed, someone has a screenshot of a Weibo post from May 22nd:
The seven characters in Chinese means: How come the bear has not stepped down. In red, it shows the IP address comes from the USA.
Obviously someone in power think this is about our Dear supreme leader (see our newsletter 17). If this is the real reason, it will be quite funny.
But maybe it is just a delay. We will see.
(and if you haven’t been following, Blizzard belongs to Activision, and Microsoft announced an agreement this year to acquire Activision Blizzard in a $68.7bn deal)
According to Wikipedia: > In June 2022, a large number of fictitious articles were found on the Chinese Wikipedia, and user:折毛 created as many as 206 articles related to ancient Russian history. Most of these articles were hoaxes, and the Chinese Wikipedia submitted the articles she created to requesting deletion, and they have all been deleted.
The English Wikipedia was also affected. One of the articles was translated from Chinese into English, and from English into Arabic, Russian and Romanian by other Wikipedians, and then from Russian into Ukrainian. These contributions have caused far-reaching misinformation and multilingual damage.
You can read the full story on Wikipedia and also read user:折毛 explanation/apologies