Hi everyone, welcome to difference frames the world
a channel to see the world differently
Yesterday, one viewer asked us to prepare a video
about the risk of China's village banks
and today, we want to talk about it briefly
before starting the video
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now let's begin today's topic
whether China's village
and township banks will
bring forth a financial crisis in China
recently
some banks in China have been facing trouble
because of a scandal
involving five village and township banks in Henan and
Anhui provinces
on June 24
CNN published a report
regarding the event
claiming savers might lose everything
it turns out to be false
as the Chinese government has stepped in
and it has been working on the disposal plan for
those depositors
after nearly three months of efforts
the police have roughly identified the fact of
that case and
found the truth over that incident
Henan new fortune group
manipulated five village banks in Henan and Anhui
through internal and external conspiracy
using 3rd party platforms
and other
money brokers
to take position of public funds
according to the evidence available so far
the vast majority of ordinary customers
do not know the crimes of new fortune group
and have not received the promised high interest return
or subsidies
the guy behind the new fortune group
has reportedly escaped from China and it takes time
to get him back
the government drafted
the disposal plan to advance the principal
amount of those customers in batches
as the original data had been
concealed or deleted by the criminals
a new customer information system
has been constructed in both provinces
the advances will be made in batches
with the ordinary
small amount customers being the first
the second step
is for customers
over 50,000 yuan
an equivalent of above 8000 US dollars
one after another
after the scandal of those five
village banks came to light
the Chinese banking and insurance organs have
reportedly said
that they will handle the issue based on the law
and any lawful business activities
are protected
on July 10, a massive protest
took place in the capital of Henan province
however
related departments have denied that
the disposal plan resulted from the protest
in the past three months
the Chinese public security authorities
have collected a large amount of evidence after
a strict investigation
and the local governments and
relevant central departments
have tried their best to mitigate the risk
after all preparations are already
the first batch of fund advances started according to
the schedule several days ago
in China there are over 1600
village banks in more than 1300 counties
and they have played
an essential role in rural areas
help farmers
in the past two years
China has tightened
control of small banks
after it cleared over 4,000 internet banking agencies
in October 2020, China's regulators silenced Jack Ma
for his remarks
about reforming China's banking system
at the Shanghai bund summit
China then probed into his Ant group and Alibaba
in a previous video
we mentioned that
China had been very strict with financial
security and stability
and no one could override rules
we said last year that Jack Ma
should be fine, with no life danger, but
he would be quiet
for a while
not high profile as before
it turned out to be correct
China does not have Wall Street
and no billionaires or interest groups
can dominate the country
in the first half of 2022
China encountered difficulties because of
the covid pandemic
and the growth rate was merely a little over 2%
as a result
the Chinese government will try to boost its economy
and the new round of expansion has come
the incident is a crime coupled with corruption
but it will not evolve into a financial crisis
as the country needs a stable environment
to develop its economy
it is a scandal
but it is not severe enough
to shake the Chinese banking system
the China banking and insurance
regulatory commission will not let this incident
ruin the financial sector
as a country with 1.4 billion people
China has many problems
and there are many corrupted officials
for such a
big country like China
it's not
a rare thing
it's normal
the incident, to some extent,
is a good thing for China to deal with such a problem
before it becomes a systematic risk
however
the depositors should remember that they should not,
they cannot, pursue high risk returns in small banks
if they are risk-aversive
it is a valid point not only in China
but also across the world
however, we need to clarify that
most customers involved in the crime, in the scandal,
do not know
those so-called village banks
were actually controlled by a criminal group
and we should not blame them for being cheated
they are victims. any banks in the world can go bankrupt
and for one account in China
the insurance amount is capped at half a million RMB
So,
it is always a good idea
to deposit the money into several accounts
just in case
China needs to grow to cover the problems,
or to solve the problems it faces
and only when the economy is growing
can China have enough time
and resources to solve its problems one after another
in the past six years, China has been controlling
its overheated housing sector and many
real estate giants have defaulted
when the Evergrande crisis occurred
we said China would loosen its control
over the housing sector
and it has already
come true
in many Chinese cities
the local governments encourage people to buy properties
many people are worried, as western media have been
exciting China’s collapse for decades
China has overcome a lot of difficulties
and become stronger
each time
the incident of village banks is a minor problem
and China will solve it shortly
thank you for watching, and see you tomorrow