Chinese investors held after metals exchange protest plans

People protesting outside the office of the China Insurance Regulatory Commission in Shanghai, claiming they were tricked by the Fanya metals exchange, on Sept 25, 2015.
People protesting outside the office of the China Insurance Regulatory Commission in Shanghai, claiming they were tricked by the Fanya metals exchange, on Sept 25, 2015.PHOTO: AFP

BEIJING (AFP) - Hundreds of Chinese investors who lost vast sums on a failed metals exchange were detained to stop them mounting a protest in Beijing, several of them told AFP on Thursday (Oct 29).

The move to prevent the demonstration against the state-managed Fanya Metals Exchange reveals the authorities' sensitivity to unrest linked to financial losses in China, where stock markets have plummeted in recent months, wiping trillions off valuations.

The protest was planned for Monday and would have coincided with the start of a key Communist Party meeting in Beijing.

Yu Haichao was among more than 2,000 investors who travelled to Beijing to take part, but police knocked on the door of her Beijing hotel room around midnight and told her they would take her to a meeting to resolve the dispute, she said.

Instead she was driven to a detention centre on the outskirts of Beijing, where about 300 other would-be protesters had already been corralled, she told AFP.

"I was kept in a cold room with about 100 others without food, water or heat," Yu said. "They used such a show of force, and we didn't even break the law." "I was terrified, I feel completely helpless," she added. "I will never protest again."

The protesters were forced by police to sign a pledge that they would not attend any gathering related to protest about the exchange, she said, and the following day officials took her back to her home province Shanxi.

Three other people AFP spoke to gave similar accounts to Yu, while another investor, Klaus Zhu, evaded police after hearing others were being carried off.

While most of the Fanya protesters were sent back to their home towns, accompanied by local government officials, about a dozen have been held by police and formally detained, said Zhu.

Zhu said he had invested one million yuan (S$220,000) in the exchange after seeing state television endorsing the project.

- 'I don't know what to do' -

The Fanya exchange in southern China offered investors a bet on increased metal prices, promising some double-digit returns on their investments.

Many Chinese financial institutions offer high-return investment schemes based on increasing asset prices, but slowing growth has heightened fears that such products could go bust, potentially sparking social unrest.

Fanya's problems date back to before the Chinese stock market plunges that began in June.

China's main financial institutions are government-run, and many expect the state to step in when the investments they have chosen go bad.

Last year the government encouraged citizens to invest in shares, and has spent hundreds of billions in recent months to try to prop up the stock market.

With commodities plunging worldwide, metals prices have fallen this year and some of Fanya's reported 220,000 investors say that since April they have not able to withdraw funds as promised.

Yu, a housewife, said she had put about 176,000 yuan into Fanya.

"I still haven't told my husband we lost this money, it was supposed to be for my son's education abroad," she said. "I'm terrified and I don't know what I'm going to do." Chinese authorities are extremely sensitive to large-scale organised protests, often attempting to stop them before demonstrations gain momentum.

Several hundred Fanya investors protested in Beijing last month outside the office of China's top securities regulator.

Police were present but no one was detained, protestors said.

In August, investors seized Fanya's chairman Shan Jiuliang at a Shanghai hotel and handed him over to police, reports said. He was later released.