Police thwart protest rallies by victims of China’s underground financial system
An unknown number of Chinese investors who have lost their life savings in the country’s peer-to-peer (P2P) lending industry mounted a failed attempt at a demonstration before the banking regulator on Monday, amid heavy intervention by the police in Beijing’s financial district.
Hundreds of uniformed police, ancillary police and plain clothes officers patrolled several city blocks around Finance Street, where the central bank, as well as the regulators for stocks, banks and insurers are located.
Alex Li, a 35-year-old organiser of the demonstration, said disgruntled investors from all corners of the country had gathered in the capital city over the weekend to petition the central government.
“At least 8,000 investors have made it to Beijing,” Li said by phone from Beijing. The number could not be immediately verified.
Hundreds of investors had attempted to gather outside the head offices of state agencies on Monday, including the China Banking and Insurance Regulatory Commission (CBIRC), to press for an official investigation into the suspensions of fund withdrawals in more than 100 lending platforms last month, Li said. No demonstrators could be seen around the Finance Street area on Monday.
Most of the groups were broken up by police, while hundreds of others were ordered to board buses to leave the capital, according to several witnesses. Video clips circulated on social media showed uniformed and plain clothes police dragging people away, but the origins and dates of the clips could not be ascertained.
Police also conducted identity card checks at train stations and bus terminals, according to Li and several other investors.
Beijing’s police did not respond to faxed requests by the South China Morning Post for comment.
“The government is partially responsible for our losses,” said Li, adding that he had lost 250,000 yuan in the collapsed Shanghai-based P2P platform Yonglibao. He travelled for 24 hours by coach from northeastern China’s Harbin to Beijing, and carpooled to avoid police surveillance at train stations.
China’s peer-to-peer lending industry is valued at 1.3 trillion yuan (US$191 billion), part of what used to be a thriving shadow banking industry that powered the country’s breakneck economic growth and thriving commerce. It has undergone a massive shakeout in the past year, as hundreds of lenders like Yonglibao have collapsed amid tighter financial regulations.
The shakeout caught hundreds of investors, usually small businesses, pensioners and households who have put their lives savings into the get-rich-schemes offered by the lenders, with promises of 20-per cent annual returns, or several times banks’ deposit rates.
A total of 165 lending platforms stopped letting investors withdraw from their accounts in July, as a financial crackdown sucked up cash, affecting their ability to honour redemptions. Some proprietors also disappeared with their investors’ money. The number of cases jumped to triple digits last month, from 65 cases in June, and 10 in May, according to statistics by Wangdaizhijia, a data provider on China’s online lending business.
Many of the platforms engaged in risky and illicit behaviour, such as using their investors’ funds to finance their own businesses or invest in property projects. In theory, the platforms are supposed to be information intermediaries that match borrowers of small loans with lenders.
Investors reported their losses to police in Shanghai, Hangzhou and Shenzhen, where most of the platforms are based, but have been kept in the dark about the progress of the investigations, Li said.
Organised through social network chat groups, about 400 of Yonglibao’s investors had made it to Beijing, he said.
“I came with great hope to ask for information about our cases, because local bureaucrats all looked out for each other,” said Li Weifeng, a 44-year-old Yonglibao investor who travelled from the Dongguan city. “But they [the authorities] just took us away without even asking.”
The grievances come at a particularly delicate moment for the authorities in the world’s second-largest economy, occupied as they are with handling the fallout of a trade war with the United States.
Li claimed he saw hundreds of policemen and security guards at intersections at 9am near the banking regulator’s office who checked identity cards and searched the personal belongings of suspected petitioners.
Others gathered at the offices of state corruption buster, the Central Commission for Discipline Inspection (CCDI), and the State Office of Letters and Calls, the highest office for dealing with petitions, where they were also met with heavy security.
Gao Bin, a 43-year-old auditing director who travelled from Suzhou, said he was just able to escape a ring of policemen outside the CCDI, while a dozen of his fellow petitioners were captured. More than 300 fellow investors of the platform Tangxiaoseng were in Beijing, he said.
Those taken away by police were either sent back home to their hometowns immediately or detained at a temporary holding facility while they await local authorities to escort them home, Gao said, citing information provided by a fellow petitioner.
The petitioners could only sleep at internet cafes and unlicensed family hotels, as they dared not stay at licensed hotels because of security checks, he said.
Gao said he was returning home after local police pressured his boss to threaten to fire him if he refused to go back to his home city.
“I feel nothing but grief and indignation now. Why are the police treating us victims like criminals?” said Gao.
Gao said he has been unable to access an 860,000 yuan deposit since Tangxiaoseng suspended withdrawals last month. The Shanghai-based platform could not be reached to comment.