China’s banking system lacks liquidity: Gordon Chang

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China is going through a systemic debt crisis due to a lack of liquidity, according to Chinese expert and author Gordon Chang.

In comments to NTD, the Epoch Times’ sister media, he noted that 400,000 depositors were allegedly not allowed by some banks in China’s Henan province to withdraw money.

“The [Chinese Communist] The party currently has no economic response,” he said. “The country as a whole is too indebted. And so this is a problem for the future.

Chang pointed to a similar situation that happened in Shanghai.

“Shanghai banks have severe restrictions on the amount of withdrawals. It’s technically not a flaw, in a sense, but people can’t access their money,” he said. “There just isn’t enough liquidity in the Chinese banking system. And it’s not just in a distant province. So it is throughout the Chinese banking system.

He said protests had taken place outside the Henan People’s Bank of China, which is the central bank, instead of rural banks in the region, where funds had been frozen by the state since April.

“So people understand that the crisis is not just any institution, it’s a crisis, which is systemic,” he said.

Chang noted that the debt crisis is spreading to other parts of the economy, citing defaults by several major property companies.

“Evergrande, for example, had something like $305 billion in bonds. The other big real estate developers, even if they’re not as indebted…can’t pay their debts anyway,” he said. declared.

No solution

Chang says the Chinese Communist Party (CCP) has no viable way to manage its huge debts.

“I suppose they could print money. But China already has an inflation problem. So it will not be a long-term solution,” he said.

In Chang’s view, the regime has been facing this financial problem for some time.

“He was masked because the Communist Party was able to get money from outside. It was masked because they incurred debts,” he said. “But now they’re running out of room for what to do.”

Thus, Chang said he thought this could be a trigger for the CCP’s failure because “the Communist Party cannot find the solutions that would save it.”

He pointed to police violence against filers in Henan, saying it is rooted in CCP ideology.

“It’s the typical Communist Party playbook: intimidate, use force,” Chang said. “The Party line is ‘this money is not yours, it’s our money.’ And we’ll do what we want with it.

“So there is a fundamental misperception between the people and the Party.”

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Hannah Ng is a journalist covering news from the United States and China. She holds a master’s degree in international and development economics from the Berlin University of Applied Sciences.

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