Disturbing conspiracy goes viral amid China's $9 billion banking crisis

·News Editor
·5-min read

China's internet censors are working in overdrive to block vision leaking onto the wider internet of residents protesting in the street as anger in parts of the country over banking malpractice threatens to snowball.

Angry homebuyers in China are threatening to stop paying mortgages on hundreds of unfinished housing projects after construction companies faltered, leaving them with incomplete homes.

In Henan province, in central China, bank depositors say they've been prevented from withdrawing their money for weeks, sparking angry scenes and clashes with police.

"When you buy off the plan – and most people don't know this – in most cases you’re paying up front for the whole property before it's built," says Ben Hillman, Director of the Australian Centre on China in the World at ANU.

"People have bought properties that don’t exist yet.

The construction site of Zixia Garden development complex
With property developers faltering, home buyers in parts of China are refusing to pay their mortgage. Source: Getty

"That’s a crisis — it would be for anyone involved — and often entire families have pooled their resources to purchase these properties," he told Yahoo News Australia.

Families who have paid a deposit of about 20 per cent, and making mortgage repayments are staring at the prospect of losing the lot.

"You can see why people are risking life and limb to protest," Associate professor Hillman said.

Loose lending and moral hazard rife in Chinese banking

Ass Prof Hillman believed there was a genuine desire from the Chinese government to fix the banking problems but it would take time to resolve.

"There’s been so much loose lending in China over the years," he said, particularly in the regional banks where these protests were concentrated.

There is a greater degree of moral hazard in the country's banking system because "there’s more of an expectation that you’ll be bailed out if something goes wrong".

While banking malpractice is a "massive social problem" in the country, Ass Prof Hillman said localised protests about property and land deals are not uncommon.

Demonstrators hold banners during a protest over the freezing of deposits by rural-based banks in China.
Demonstrators hold banners during a protest over the freezing of deposits by rural-based banks, outside a People's Bank of China building in Zhengzhou, Henan province. Source: Reuters

Authorities are typically happy to let residents blow off steam, however the latest bout of unrest has threatened to calcify into a wider protest.

"Social media changes the dynamic and increases the chances to amplify the protest and for it to spread ... That's something that terrifies the [Chinese Communist] Party," he said.

Bank boycott videos scrubbed from social media

Four banks in Henan province and one in neighbouring Anhui have been frozen since mid-April, the South China Morning Post reported.

About 40 billion yuan (roughly A$9 billion) belonging to depositors around the country is missing, the publication reported in an editorial this week.

With growing concern of systemic risk in the country's banking system, authorities have urged patience while clamping down on online expression.

One video showing fingerprinted notices from homebuyers declaring a boycott on mortgage payments for incomplete developments was blocked on Douyin, the Chinese version of TikTok. The social media platform said "the content didn't pass scrutiny", Reuters reported.

Plain-clothed security personnel pull on a demonstrator's shirt while dragging him away during a protest over the freezing of deposits by some rural-based banks, outside a People's Bank of China building in Zhengzhou, Henan province, China July 10, 2022, in this screengrab from video obtained by REUTERS ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY.
Plain-clothed security personnel pull on a demonstrator's shirt while dragging him away during a protest over the freezing of deposits. Source: Reuters

Other videos that were blocked or deleted from social media sites included scenes of empty construction sites, protesters scuffling with bodyguards, and analyst commentaries on the boycott movement, underscoring the sensitivity of the issue.

On the social media platform Weibo, the hashtag #stopmortgagepayments has been censored, with a notice saying: "Due to related laws and rules, the topic page cannot be displayed."

A number of bank protesters told Reuters they were also unable to upload content of the ongoing protests on WeChat.

Misleading footage of tanks on Chinese streets go viral

Chinese social media companies are subject to strict laws requiring them to censor content that "undermines social stability" or is critical of the central government.

The tight control of information and the frequent scrubbing of posts breeds suspicion and ultimately creates a vacuum for misinformation.

Vision of tanks in Rizhao City in eastern China have gone viral for all the wrong reasons
Vision of tanks in Rizhao City in eastern China have gone viral for all the wrong reasons. Source: Twitter

A viral clip showing tanks in Chinese streets has been widely shared with people falsely claiming the tanks have been sent in to quell protests related to the banking turmoil.

A number of accounts with large followings have shared the footage, racking up hundreds of thousands of likes and shares on Twitter, while a Reddit post claiming the tanks were "protecting banks" garnered more than 1350 comments and sparked news articles.

However the footage appears to be from a military town in the eastern province of Shandong taken on July 17, and unrelated to the banking protests.

Ass Prof Hillman says the CCP is aware its strict censorship creates a vacuum for counter narratives and misinformation online, particularly outside of China.

"The party is obsessed with control. It will start working on its on narrative and propaganda and allowing visitors once it feels it has everything under control.

"What is interesting is what kind of actors are behind this disinformation," he added, alluding to anti-CCP groups.

Xi Jinping gunning for third term

The protests have erupted at a sensitive time for Beijing. Chinese President Xi Jinping is expected to secure a third leadership term at the 20th Communist Party Congress later this year, and social stability is crucial ahead of the meeting.

In response, regulators and local governments have stepped up efforts to reassure critics that projects will be completed and task forces have been created.

Meanwhile authorities are cracking down on the flow of information. An official at a Chinese developer said his boss had banned staff from commenting on the mortgage protests, even off the record, due to an "order from above".

Analysts at some securities and research firms in China told Reuters they were also advised not to comment on the protests.

with Reuters

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