Authorities send 20,000 armed police to monitor 100,000 protesters in south China

By Gu Qinger and Hu Tongcai, The Epoch Times Staff, Sep 7, 2008 –

Chinese S.W.A.T. officers station on major streets of Jishou City. (Epoch Times)

On September 4, almost 100,000 Jishou City residents joined together for a protest regarding money loaned to businesses that had became insolvent.

The government-supported loan scheme had encouraged prefecture-level and city-level government officials to invest in long-term, high-interest rate loans for local corporations and business people.

The problems began in early August when investors were tipped off that the businesses were insolvent.

Investors started withdrawing their investments and in less than two weeks had withdrawn nearly 10 billion yuan from the loan scheme (approx. US$1.5 billion), causing the corporations to become completely insolvent. The loan scheme was worth nearly 7 billion yuan (US$1 billion).

Authorities have responded to the protest by sending 20,000 Chinese SWAT officers into the city. Nine of

Chinese S.W.A.T. officers station on major streets of Jishou City. (Epoch Times)

the main coordinators of the protest have been arrested, and the 20,000 officers remain stationed in the city.

Since September 4, victims of the illegal business loan scheme have been seen walking around the major streets in Jishou City. The Jishou Train Station was so crowded that the train was unable to continue its service and a large number of commuters were forced to stay at the train station.

Eyewitnesses say local authorities have mobilized a large number of armed police from other cities to suppress the 100,000 protesters.

Jishou City resident Mr. Li told a reporter, “There are 20,000 SWAT officers stationed in Jishou right now. They are carrying machine guns and armed with even small mortars. The local authorities have arrested nine protesters. There is a lot of tension right now. There are many policemen blocking the media. A lot of media in China are reporting the protest from the perspective of the Chinese government.”

Another resident Mr. Yang said, “To prevent the public from launching another protest, local authorities have sent the police to guard the train station. The authorities have claimed that they would tell the public how they will solve the problem within three months and shut down the businesses which fail to pay the loans.”

Encouraged by the local government, Jishou City residents invested in nearly 7 billion yuan worth of  business loans.

According to a local activist who investigated the incident, the prefecture-level and city-level government officials who invested in the business loans withdrew their investments and their bonuses as soon as they heard the news of insolvency at the beginning of August.

The news traveled fast. Soon many local residents withdrew their investments and bonuses. In less than two weeks, nearly 10 billion yuan of loans (approx. 1.5 billion USD) had been withdrawn, leaving the corporations completely insolvent.

It is alleged that the local government granted and endorsed the business loans to over 20 corporations and individuals, including Fuda, Rongchang, Sanguan, Weiye, Gexie and Jidian.

The local government enticed the public to invest in the business loans by offering 3 percent, 5 percent, 8 percent and 10 percent interest rates, which are higher than normal bank interest rates. This offer quickly captured the imagination of many investors who they poured their money into the scheme.

Mr. Yang said, “With an 8 per cent interest rate, an investment of 10,000 yuan will yield over 1000 yuan in interest revenue a month. The advertisement was endorsed by the local government, but now the government is not doing anything.”

Mr. Li said, “The local government has a lot of land, but the corporations do not have enough money to develop it. The government then allowed the corporations to acquire investments from the public. Soon the investment money snowballed. Without the approval from the government, no corporation may solicit investments from the public. There are a lot of wealthy government officials who also made investments. Nearly all the corporations in Jishou solicited investments from the public.”

Victims of the business loans include the elderly as well as unemployed people. They have now lost all of their life savings and become penniless.

According to an unnamed source, a female farmer solicited business investments from an entire village. When she failed in her effort to withdraw the villagers’ investments and interest revenues, she drank poison to kill herself. The anxious investors approached the corporations to get their money back, but ended up being beaten up by thugs employed by the corporations.

Jishou City resident Ms Xiong said, “Many people were lured to sell their lands and make an investment by the promise of high interest. Some people even got loans to make an investment. Some poured in  their entire life savings. Nearly every household here has made an investment. Many people were lured by the temptation of high interest rates. Even people living in retirement homes  made an investment, taking money out of their life savings. The Chinese government must step in or else many people will commit suicide.”

Because of the severity of the situation, the Hunan provincial government has mobilized the military and the police from nearby cities to suppress the protest. Sources say Beijing is well aware of the incident.

– Original: The Epochtimes