Tag Archives: Henan

Henan Banking Mess Raises Stability Concerns

THIS BYSTANDER BELIEVES that there is more to be discovered about the banking scandal in Henan that led to violent clashes between depositors and police on Sunday and now to financial regulators ordering the banks involved to start releasing funds to their depositors.

Earlier this month, hundreds of depositors in four rural banks in Henan had the health codes on their smartphone apps used to enforce Covid-19 quarantines suddenly turn red, despite testing negative for Covid-19. Five local officials were subsequently disciplined for a brazen effort to stop the disgruntled depositors from travelling to the provincial capital Zhengzhou to petition authorities for redress.

The scandal had come to light in mid-April after the four rural banks and another in neighbouring Anhui suspended their online banking services and froze an estimated 400,000 customers out of their accounts containing tens of billions of yuan. The purported reason was for the banks to conduct a systems upgrade, one that seemingly never ended. 

Depositors at Yuzhou Xinminsheng Village Bank, Shangcai Huimin County Bank, Zhecheng Huanghuai Community Bank and New Oriental Country Bank of Kaifeng in Henan province and Guzhen Xinhuaihe Village Bank in the neighbouring Anhui province were affected. 

In May, banking regulators launched an investigation into Henan Xincaifu Group Investment Holding, a private investment firm with stakes in the rural banks involved. By then, (peaceful) protests demanding the accounts be unfrozen had started to be held outside Zhengzhou offices of the China Banking and Insurance Regulatory Commission (CBIRC).

At the start of this week, police arrested what were described as members of a ‘criminal group’ said to be involved in taking over the rural banks and making illegal transfers through fictitious loans. Authorities say they are looking for a man identified as Lu Yi, accused of being the mastermind who controls Henan Xincaifu.

Bank deposits of up to 500,000 yuan ($73,500) per depositor per bank are covered by deposit guarantees, although there is some ambiguity over which rural bank accounts are protected. Nonetheless, the CBIRC says that bank customers with up to deposits of 50,0000 will be repaid from July 15.

It is not yet clear what will happen to deposits of more than 50,000 yuan, although the CBIRC has said it will not reimburse accounts with a whiff of suspicion about them.

This has the look of a central government bailout, perhaps buy-off would be more accurate. It is difficult to escape the thought that, however described, the action was prompted by fears of bank runs on other small lenders and the threat to social stability they would pose.

China has some 4,000 rural banks, many of which have one foot in the murky world of shadow banking and whose ownership structures allow shareholders to gain significant control without regulatory approval and put themselves in a position to syphon off cash through loans.

Bank regulators have been tightening up on rural banks for more than a year. The Henan banks scandal will likely lead to a further turning of the supervisory screw. 

In the Henan banks case, one question is whether local officials or regulators were turning blind eyes to whatever was going on, and whether they were benefiting from it.

With central government putting a premium on economic and social stability, this could easily become an exemplary case to demonstrate how local officials are now expected to have ditched the old ways. Protestors’ banners accusing the provincial authorities of corruption that appeared last weekend will be disconcerting to Beijing.

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The Unhealthy Use Of China’s Health Codes App

THE PUNISHMENT OF five local officials in Henan province for using a COVID-19 quarantine enforcement app to prevent protesters from travelling shows the capacity for digital repression and Beijing’s desire that local officials’ use of it does not get out of hand.

The punishments of two officials for ordering the tampering with the codes and three for carrying it out followed an investigation by the local discipline and supervision commission in Henan’s provincial capital, Zhengzhou.

Earlier this month, hundreds of people who had lost savings in a Ponzi scam in Henan found their health codes on the smartphone apps used to enforce COVID-19 quarantines suddenly turned red, despite testing negative for COVID-19.

A red code prevents access to public transport, hotels and other facilities. This prevented the citizens from travelling back to Henan to access their frozen bank accounts and petition authorities for redress.

The scam had already been widely shared on social media, and the apps turning red outraged social media users already weary from lockdowns. Posts about family members of depositors being placed in mandatory quarantine after their relative’s health code turned red further fuelled the anger at health codes being turned into what was called certificates of good citizenship.

The public relations damage at a time when Beijing was doubling down on its zero Covid policy soon had state media condemning the alleged abuses by local officials. China Daily described tampering with health codes as ‘ one of the worst forms of abuse of power’.

China’s new digital privacy regime limits the independent misuse of digital technology by China’s vast bureaucracy. However, while central leadership will not impose any limits on its ability to use technology for political ends, it is demonstrating that it will discipline lower-level officials if they do so for their own ends, even if that is a misguided attempt to maintain local public order.

However, the more significant concern remains that the health code system provides higher-level authorities with a repressive tool to track and quarantine arbitrarily any opponent or critic.

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Henan Flooding Death Toll Rises

Screenshot from state media of flood damage in Zhengzhou, Henan province, July 21, 2021

THE DEATH TOLL from the torrential rains in the Henan provincial capital, Zhengzhou, has risen to 25, including 12 who died in the flooded metro system. Surviving passengers’ harrowing accounts of being trapped in neck-high water have been posted on social media.

State media say at least seven people are missing in Zhengzhou. A further four casualties have been reported in the nearby city of Gongyi, which has been inundated.

Across the province, more than 1.2 million people have been affected, and some 165,000 evacuated in a massive disaster rescue and relief operation. Damage, including to crops, is widespread after a year’s rainfall fell in three days.

Authorities are warning that the heavy rain has increased the risk of geological disasters in Henan’s mountainous western and northwestern regions, raising the prospect of further loss of life. The flooding has already collapsed some roads in the province.

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Severe Flooding Hits Central China

State media shows a courier wading through a waterlogged road in Zhengzhou, capital of central China's Henan Province, July 20, 2021. Photo credit: Hou Jianxun/Xinhua

RECORD RAINFALL IN Henan province has caused extensive flooding and left at least 12 people dead.

The twelve who died were trapped by rising waters in the metro system in Zhengzhou, the provincial capital which lies on the southern bank of the Yellow River. More than 500 others were rescued from flooded trains and platforms underground.

The city experienced two-thirds of its annual rainfall in 24 hours spanning Monday and Tuesday. The silt-rich Yellow River often floods during the rainy season from July to October.

Some 100,000 residents have also been evacuated from the city, known for being a centre for iPhone assembly at a Foxconn plant, though the company says that the flooding has not affected operations.

More than a dozen cities in the province have been deluged. Property damage is extensive. Henan accounts for a quarter of the country’s annual wheat harvest.

Concern is mounting that a breached dam in Luoyang city could collapse. Several reservoirs whose water levels are above safety levels also pose a risk of further disasters, as do landslides.

Forty-five years ago 125,000 people lost their lives in flooding in Henan, many in incidents that occurred after the initial flooding.

Thousands of rescuers including soldiers are being deployed in a huge rescue effort. State media is actively countering social media grumbling about the lack of warnings of flood risk ahead of the heavy rains.

Local officials have been told to act pre-emptively where they see danger and not wait for instructions from central authorities. This would suggest that lessons have been learned from the slow initial response to the Covid-19 outbreak in Wuhan, where municipal officials were accused on not acting swiftly enough to contain the outbreak.

The flooding in Henan is the latest example of extreme weather around the world.

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Death Toll From China’s Rains Hits 70

The death toll from rain-triggered floods and landslides in central China has risen to 70 with 32 others missing, officials now say. The National Disaster Reduction Commission says more than 21 million people across eight provinces are now affected by the unusually late and heavy summer monsoon rains deluging Sichuan, Shaanxi, Henan, Chongqing, Hubei, Shandong, Shanxi and Gansu. Direct economic damages are put at an estimated 26 billion yuan ($4 billion). Hubei, Shaanxi and Sichuan have borne the brunt of it.

In the worst incident, a landslide that buried a brick factory and partially destroyed as ceramics plant in Baqiao, a suburb of Shaanxi’s provincial capital, Xian, 27 people are now reported dead with a further five missing. Rescue teams continue to recover bodies. (Update: The final death toll has been confirmed at 32 with the recovery of the last missing body on Tuesday, four days after the landslide.)

Meanwhile, the highest flood crest so far this year on the rain-swollen Yangtze river reached the Three Gorges Dam on Wednesday morning, raising the water level to 164 meters, 20 meters above the alert level.

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Making Snow In Henan

You can’t cloud seed to induce rain- and snowfall without clouds. Now it has started snowing, albeit lightly, in Henan on the drought-parched North China Plain, the cloud seeders can set to work across the province. Those above are at Luoyang. No nation is more enthusiastic about using anti-aircraft guns and rocket launchers to blast the sky with silver iodide.

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Last Five Bodies Recovered From Henan Mine Blast

Recovery teams have now brought out the bodies of all 37 coal miners smothered by coal dust after by an underground explosion in the Pingyu No.4 coal mine in Yuzhou in Henan on Saturday, Xinhua reports. Two hundred and thirty nine miners survived the disaster. Strenuous official efforts are being made to rid the industry of its reputation as the world’s most dangerous, but this is still China’s worst mining accident since only June.

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China’s Downpours Continue, Flood Levels Critical

The death toll from this year’s rainstorms and floods has now passed 800 with 333 deaths occurring since July 14, Xinhua reports. The human toll is thankfully not as devastating as in the great floods of 1998, when more than 4,000 died, but the numbers affected, estimated to be more than 100 million, the extent of the flooding (see map) and the widespread destruction of farmland, crops and homes may exceed them. Water levels in rivers and dams remain at danger levels, with rivers surging. More rain is in the forecast, especially for Shaanxi, Sichuan and Henan, offering little prospect for relief.

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More military (above, reinforcing the banks of the Changhe River in Jiangxi) have been thrown into the flood prevention effort, while civilians have been drafted to monitor and shore up embankments along the length of the Yangtze and Yellow rivers and their many tributaries. Officials remain on high alert at places like the Three Gorges Dam which is again edging ever nearer to capacity.

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Mass Resettlements Start To Irrigate North China

Plans to bring water to the arid drought-plagued North China Plain and its fast-growing cities like Beijing and Tianjin, are typically sweeping. Just as typically, they involve the mass resettlement of a third of a million people.

The plans call for drawing water off three western and southern rivers through a series of canals and pipes. The three parallel projects, once completed, will cost an estimated $62 billion, more than the Three Gorges hydroelectric dam, and, like the dam are raising a environmental and human issues. In addition there are concerns that the diverted water will be too expensive to use for farming, though the plain is China’s bread basket.

Residents in Hubei and Henan provinces have just started to be moved, Xinhua reports, so sluices can be built at the Danjiangkou reservoir to divert water from the Yangtze into the so-called north-south route, on which construction started in 2002. Although a quarter of the scale of the Three Gorges forced resettlements, these latest relocations will take until 2011 to complete and are already raising complaints from residents that they are not getting the resettlement terms they were promised.

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China’s Wheat Growers Face Drought

Drought is the latest potential natural disaster in the making. The main wheat growing province, Henan, is very dry, having had half its normal rainfall since last September. The provincial meteorological bureau has just  issued its highest-level drought warning, Xinhua says.

The agriculture ministry said earlier this month that one third of the province’s crop was already drought affected. Shangdong and Hebei, the next two largest wheat growing provinces, are similarly drought-struck. The ministry says that a larger area is affected than was the case last year, when China nevertheless harvested its second largest wheat crop ever, at 112.5 million tonnes, a rise of 3% from 2007.

The government has allocated 100 million yuan ($14.6 million U.S. dollars) of emergency aid for  wheat farmers in those three provinces plus Shanxi, Anhui, Shaanxi and Gansu.

China holds large quantities of grain in reserve because of  frequent droughts in the northern plain, so drought is not likely to push up food imports.

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