China’s Henan bank scandal not just a financial crisis, it may be a lasting political calamity: analysts
- China’s central government must find ways to promptly repay the depositors or risk the effects of damaged public confidence, say scholars
- Depositors’ lost US$6 billion is reminder to authorities that advanced technology alone cannot maintain stability, says academic
The blow to public confidence in financial stability and the government’s ability to protect their legitimate interests could be a long-term issue, unless the central government can find ways to promptly repay the depositors, they say.
Dali Yang, a political scientist at the University of Chicago, said the protest in Henan was a major political crisis because of its scale and severe nature.
“This is a credibility crisis involving not just a few rural banks in Henan province but a large number of grass-roots account holders across the nation. The economic loss is enormous,” Yang said.
“From a Marxist framework, finance and economic risks are essentially political risks and that’s why many are concerned with containing the problem from spreading further.”
