When Chinese Protesters Came Up Against Xi's Security Machine

Jack Yao, a Chinese Communist Party member, never wanted to be an activist.

Having escaped rural poverty and joined Beijing's middle classes through decades of study and work, he saw himself as a patriotic poster child of the party's successful rule.

Yet the 43-year-old's life has been upended since he and thousands of other people abruptly lost access to their savings in a banking fraud scandal that erupted in April, which centred on a string of rural lenders in Henan and Anhui provinces.

After venting his anger on social media and discussing protests with fellow depositors to lobby authorities to reimburse their funds, he says he found himself in the sights of the government's high-tech social surveillance machine.

The pushback by Yao and thousands of his fellow bank depositors from across the country comes during a sensitive time for China, with Xi Jinping set to secure a third leadership term at a party congress starting Sunday that will ensure his place as its most powerful leader since Mao Zedong.

The unusually prolonged and public dissent, part of a broader swell of popular anger, from mortgage strikes to COVID lockdown protests, has persisted despite a security clampdown. It offers a glimpse of the lengths some frustrated citizens will go to in taking on the world's most powerful security state.

"I could often receive more than a dozen phone calls a day from police, day and night," said Yao, who works at a state-owned company, and fears he'll never recover his life savings of over 10 million yuan ($1.4 million).

"Their overriding message is - do not make trouble," he added. He says he feels let down by the state he revered: "When you try to defend your rights, they try to maintain social stability."

China's Ministry of Public Security, the Henan and Anhui local governments, and police departments in those provinces and Beijing didn't respond to requests for comment for this article. The rural banks under investigation and the CBIRC national banking regulator also didn't respond.

Chinese authorities say social stability is the foundation for a prosperous future and dismiss human rights complaints as Western propaganda and interference in internal affairs.

The stories recounted to Reuters by Yao and 14 other bank depositors, who used social media to discuss and coordinate efforts to recover their funds, reveal the scale and reach of China's high-tech security apparatus.

Their agile tactics and pursuit of clear goals also exposed the system's limitations.

Strategic adaptations included splintering into dozens of smaller WeChat groups that were harder to keep tabs on, communicating between groups via encrypted apps such as Telegram and sharing more sensitive information via phone calls or in person, according to depositors.

"We first divided into a provincial group, and then a city group below the provincial group, and then built a small group under the city group," said Hangzhou resident Sarah Wang, 39, who had lost access to around 640,000 yuan in deposits at the time. "People in my group were all nearby, four to five people."

Months of simmering unrest, which had seen at least two early protests at the offices of banking regulators swiftly dispersed by police, reached a flashpoint on July 10.

A crowd of about 1,000 people, many waving Chinese flags, rallied outside the Zhengzhou branch of the central bank for several hours before the protest was violently broken up by security personnel in scenes that went viral online.

The next day, China's banking regulator announced Henan and Anhui provinces would start repaying many customers on behalf of the rural banks, and most of the depositors have since been reimbursed. On the same day, police said they had arrested suspects linked to a criminal gang controlling a number of those banks that had made fake loans to illegally transfer funds.

"In the case of the depositors, they managed to mobilize en masse, which is incredible given the level of surveillance on WeChat and other apps," said Diana Fu, associate professor of political science at the University of Toronto, who studies China.

"Their ability to coordinate shows that regardless of censorship surveillance, and other pre-emptive measures, when enough citizens have grievances - especially if they are economic in nature - they will express their anger via collective action."

WeChat's developer Tencent didn't respond to a request for comment.

CODE RED, CODE RED

Chinese state media outlet the Global Times reported in mid-August, citing a CBIRC official, that the banks scandal had involved about 30 billion yuan ($4.2 billion) and 600,000 depositors. Reuters could not independently verify the figures.

The first signs of trouble emerged on April 18 when four rural banks in Henan and one in Anhui notified depositors, including Yao, that online and mobile banking services were suspended due to system maintenance.

Such operations usually take place at night and last only a few hours. So after a few days, many depositors went online to share their concerns and began forming chat groups.

Yao said he called his bank several times but the people on the phone told him they didn't know when the issue would be solved.

On April 24 he drove to Zhengzhou to join dozens of others seeking answers from the Henan regional branch of the CBIRC (Chinese Banking and Insurance Regulatory Commission), he added. There he was told by officials that police had opened an investigation into their complaints and that they should wait.

By early May, Yao had still heard nothing.

The depositors interviewed by Reuters said they began to congregate in large chat groups and livestreams on WeChat and other social media apps, where they agreed to stage protests designed to put pressure on authorities to rescue their savings.

There were dozens of such groups, each with hundreds of people, while livestreams sometimes gathered thousands, the depositors said.

Police always seemed to be one step ahead of them, though.

On May 12, at the CBIRC's main office in Beijing, Yao said a few dozen depositors gathered to demand answers, but security personnel were already assembled in advance. Yao said police took him away to a nearby station and only released him after he signed a pledge not to cause more trouble.

On May 23, security people in Zhengzhou flanked hundreds of marching depositors for several kilometres and dispersed them before they reached their intended destination, the Henan government headquarters, six depositors said.

"Every time we turned up to rally, there were a large number of security and police already waiting. WeChat is completely visible to the authorities," said Yao, whose views were echoed by the other depositors.

The next planned protests in Zhengzhou offered clearer evidence of official foreknowledge.

On June 11, a day ahead of the scheduled demonstrations, authorities began changing the health codes of hundreds of people on their COVID-19 tracking mobile phone apps to red, depositors said, making it difficult for them to travel or enter buildings under China's strict pandemic policy.

Dozens of depositors posted screenshots, testimonies and videos online relating what happened. These were shared millions of times, prompting widespread anger, even from some state media, before the content was censored.

On June 23, anti-corruption authorities announced that they had punished five officials in Zhengzhou for deliberately turning 1,317 citizens' health codes red.

WHO TO RAGE AGAINST?

By this point, according to many depositors, it was clear that authorities knew their every move by monitoring their large WeChat groups.

Many decided to adapt their tactics ahead of the next planned demonstration - the flashpoint July 10 protest in Zhengzhou - including by breaking up into smaller online groups and using virtual private networks, or VPNs, to breach China's "Great Firewall".

Jiangsu province resident Fiona Xu, who had lost access to around 8 million yuan in deposits, said many depositors felt they had little choice but to go "over the wall".

"Our WeChat group was easy for police to monitor. When we set a date in the group, police would stop us in advance," she added.

The original groups still remained open, but were mainly used for members to share news and give each other support, with no sensitive information discussed, according to depositors.

"Generally they are groups to keep warm in," said Wang, adding that members still had to do "homework" like continuing to call the banks, police and regulators, as well as posting on social media.

The date for the new Zhengzhou demonstration was kept largely secret, more than a dozen depositors told Reuters. Until the last minute, many people only knew that they had to wake at 4 a.m. in Zhengzhou on July 10 for further instructions.

About 1,000 people gathered at dawn outside the local central bank branch. A long banner in English read: "Against the corruption and violence of Henan government." Protesters chanted: "Henan banks, give us back our deposits."

The crowd was eventually surrounded and outnumbered by police and unidentified men mostly wearing white shirts. At around 11 a.m. the security personnel charged and dragged depositors onto nearby buses, according to the depositors and online footage of the clashes, which was shared millions of times before the videos and related hashtags were censored.

Wang said she suffered a hairline fracture of her jawbone when a plain-clothed security man hit her with his elbow.

The next day, the CBIRC announced Henan and Anhui would start repaying customers on behalf of the rural banks, starting with those with deposits of up to 50,000 yuan. The regulator subsequently regularly raised the threshold by increments until Aug. 30, when the sum due for reimbursement hit 500,000 yuan - the state-guaranteed limit on deposits.

However Yao, like hundreds of others with large deposits, has yet to be refunded. He wants to keep fighting but says he doesn't know what else he can do.

Feeling disillusioned, he now wants to leave the Communist Party.

"I do not know who to rebel against. Who am I persecuted by? There's no specific person."

Zhiwu Chen, professor of finance at the University of Hong Kong, said both state authorities seeking social stability and consumer activists seeking redress had achieved a measure of success.

"Both sides have probably drawn the conclusion that they won in this battle," he said, adding that he expects more financial scandals and social discontent to materialise in the coming years as China's economy slows.

"This game will continue."

($1 = 7.1266 Chinese yuan renminbi)