"China’s Village Bank Collapses Could Cause Dangerous Contagion" By CWP Alum Zongyuan Zoe Liu

China just experienced its first wave of bank runs, triggered by frozen deposits in online accounts worth 40 billion yuan ($6 billion) and affecting 400,000 depositors. The scattered runs on small banks in central Chinese towns are not singular events but the precursor of a nationwide reshuffle of small and medium-sized banks (SMBs). Social media virality and dramatic stories of losses and protests are shaking savers’ trust in SMBs, presenting an urgent challenge to China’s banking regulators. China is fighting a war on multiple fronts against financial insecurity right now, from dubious online investment schemes to an ongoing property crisis. Preventing potential financial contagion and social unrest triggered by runs on small banks is a battle that Chinese regulators and policymakers have to win.

By Zongyuan Zoe Liu, a fellow for international political economy at the Council on Foreign Relations. More Here

Zongyuan Zoe Liu is a fellow for international political economy at the Council on Foreign Relations (CFR). Her work focuses on international political economy, global financial markets, sovereign wealth funds, supply chains of critical minerals, development finance, emerging markets, energy and climate change policy, and East Asia-Middle East relations. Dr. Liu’s regional expertise is in East Asia, specifically China and Japan, and the Middle East, specifically Gulf Cooperation Council countries. Dr. Liu is the author of Can BRICS De-dollarize the Global Financial System? (Cambridge University Press) and Sovereign Funds: How the Communist Party of China Finances its Global Ambitions (Harvard University Press, forthcoming 2023).

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