Hundreds of Chinese investors who lost savings in the collapse of China Evergrande launched a quiet campaign this month for an update from officials on the massively indebted property developer.
In the previously unreported action, small groups of disgruntled investors turned up at three Shenzhen government offices in succession to ask for an update on an investigation launched more than a year ago, sources have told Reuters.
They said they hoped this method of applying pressure on officials would not be deemed as a form of unlawful public protest.
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While the grassroots action is unlikely to shape the court-ordered liquidation of Evergrande, which failed with more than $300 billion in liabilities, it shows how deep-seated frustration remains for the middle-class Chinese who saw their investments wiped out.
The cautious protests also come at a time when China’s government has been on high alert for signs of social strain caused by financial stresses from a slowing economy.
“If we don’t speak out now, there will never be a chance,” one of the Evergrande investors who participated told Reuters. Like others, the person asked not to be named because of the fear of reprisal by Chinese authorities.
A real-estate downturn that began in 2021 has squeezed financing for local governments, home owners and businesses tied to a sector that once accounted for a quarter of China’s economic activity.
Aggrieved investors in now-worthless “wealth management” products issued by Evergrande held protests in late 2021 and early 2022 outside the developer’s offices after it missed payments to contractors and creditors.
Complainants avoid public protest
The organised effort by Evergrande investors over the past week in Shenzhen marked the first sizeable protests since 2022.
They were organised to follow official channels for expressing grievances in order to avoid antagonising authorities, people with knowledge of the campaign said.
More than 500 former Evergrande investors joined three separate actions in Shenzhen, according to people who took part.
On Monday, a group visited an investigation bureau in the district where Evergrande was headquartered. On Tuesday, another group queued at the city’s economic crimes bureau. On Wednesday, a third group went to a city court.
The aim was for the investors to reach the front desks of those government offices one-by-one in a manner that would not look like a public protest or invite a crackdown by police, people involved said.
Reuters could not confirm the total number of people involved. A Reuters reporter saw dozens of people outside the investigation bureau on Monday, and dozens of others gathered near the court on Wednesday.
The planned timing and meeting location for the action was only shared among a group of investors on the day itself, the people said. The Evergrande investors have remained in touch with each other over the past two years in small WeChat groups.
“We need to stay low profile and talk one-on-one, otherwise we’ll be shut down,” one of the participants said.
Evergrande, Shenzhen police, which oversees the investigation bureaus visited by the investors, and the city court did not immediately respond to comment requests.
Social strains
Lured by promised yields of 12% and freebies including Gucci bags, more than 80,000 people – including employees – invested in Evergrande’s wealth management products. That investment raised almost $14 billion for the developer in the five years before its collapse.
Shenzhen police said in September last year they had detained some staff at Evergrande Financial Wealth Management Co, the group’s investment arm, as part of an investigation into potential wrongdoing in the run-up to the developer’s collapse.
The pressure for answers from Evergrande investors comes at a time when social strains related to slower economic growth have become a top-of-mind concern for China’s government – and investors.
Chinese authorities regard social stability as the foundation for prosperity in the world’s second-largest economy.
Unease has grown over a spate of mass-casualty attacks this month. In two of them, police said the perpetrators targeted bystanders because of economic grievances.
Officials at every level of China’s government have urged increased scrutiny of financial disputes, including around property and wages.
China’s top security chief, Chen Wenqing, this month urged the leadership of all Communist Party committees to strengthen security controls and ensure social stability in the coming months.
Over 800 economic protests in 3rd quarter
Helped by mass surveillance technology, China’s police and security forces disperse any gathering quickly and sensitive online discourse, including discussions of the recent attacks, is swiftly censored.
But officials do sometimes shift policy to address grievances, for instance by abruptly ending Covid curbs in early 2023 or by compensating bank depositors after a fraud scandal in 2022.
Some analysts anticipate Beijing could offer more economic stimulus to improve household finances if social discontent grows.
China Dissent Monitor, a project by US-based rights group Freedom House, reported 826 protests triggered by economic reasons in the third quarter, the highest number on record and up 31% year-on-year.
Grievances included unpaid wages and undelivered properties because of the failure of developers, the group said.
Using dissent-tracking data and other inputs, Morgan Stanley analysts have developed a “social dynamics indicator” to identify pain-points for authorities.
They see the indicator’s plunge to seven-year lows as “the key reason for the policy pivot in late September,” when authorities began rolling out monetary stimulus and measures to support the property sector and indebted local governments.
The analysts say the latest policies could lift their social stability indicator in coming months, but warn it could drop again later next year when returning US President Donald Trump is expected to raise tariffs on Chinese imports, inflicting more economic pain.
“A double dip in this indicator would increase the possibility of consumption-centric” stimulus, Morgan Stanley said in a note.
- Reuters with additional editing by Jim Pollard
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