Beijing can manage Henan bank crisis and mortgage strike, say analysts

In recent weeks in China, bank protests have erupted in Henan province, where depositors’ bank accounts have been frozen since April, with large numbers of homebuyers refusing to pay their mortgages. If the Chinese government fails to act, these problems could escalate to serious levels, but Beijing is likely to contain them, say analysts.

“Beijing is most worried about systemic financial risk and systemic political risk,” Andrew Collier, managing director of Orient Capital Research, a Hong Kong financial research house, tells FinanceAsia.

Widespread shortage of capital is a problem for China’s economy but not a short-term liquidity-driven systemic risk along the lines of a financial...