China declares war on get-rich schemes, citing risk of social unrest
Public Security Minister Guo Shengkun says operators could trigger instability when their promises of sky-high returns fall flat
Chinese police will strike hard against shady financial schemes because of the risk of social unrest from such fundraising ploys, according to the Public Security Ministry.
The warning came a day before a rare gathering of thousands of protesters in Beijing on Monday. They were members of Shanxinhui (Kindness Exchange), a fundraising scheme declared illegal by the Chinese authorities over the weekend.
“There are huge risks in new types of financial crime in this era of the internet ... we must resolutely prevent financial crime issues from turning into systemic financial risks to safeguard social stability,” Guo Shengkun, China’s police chief, said in a statement on the ministry’s website.
Guo said at a nationwide meeting with local police authorities on Sunday that law enforcers must use “big data” technology to uncover and stop such crimes as early as possible.
Monetary easing in the past decade and a fragmented financial regulatory framework have led to a mushrooming of fraudulent investment programmes, spreading quickly online and luring millions of mainland investors to put down their savings for the promise of high returns.