Facing angry homebuyers and bank depositors, local authorities in China are looking to the central government to foot the bill, but Beijing wants them to take on more debt. The crisis points to a major weakness in Chinese banking and credit markets – the lack of real tests of collateral.
Chinese regulators have announced three more officials in Henan province are facing disciplinary investigation, while a third round of repayments to depositors caught up in the rural banking scam will start on Monday.
Police have arrested the ‘first batch’ of suspects in relation to a cash crisis at rural banks in Henan and Anhui provinces, a case which has highlighted risks among China’s small lenders.