A large protest broke out on September 4 in Jishou City, Hunan Province. According to a witness, nearly 100,000 people were involved. Protesters blocked all major roads and filled train stations, causing trains to stop and delayed many passengers. Jishou City locates in the West of Hunan Province, next to Hubei Province, Chongqing City of Sichuan Province and Guizhou Province. It is the capital city of Xiangxi Tu Ethnic Group Autonomous Prefecture.
The protests were quelled by military police together with traffic police, civil police and fire fighters. Dozens of people were arrested. It is uncertain if any deaths or injuries occurred in the unrest.
The protesters allege to be victims of illegal fund raising. According to sources claiming to be insiders in some of the fraud schemes, since 2004, market developers in the region offered investors a monthly interest rate of three percent, and later up to as high as 10 percent. Within a short period of time a large amount of investment from people and business was raised. It is said this trading was permitted and encouraged by local officials who hoped the short-term market boom would give their administration the appearance of success. Some officials of the autonomous prefecture also became underhanded shareholders and worked together with the developers to put the fund into investment.
Between 2004 and 2006 over 20 billion yuan (US$ 2.92 billion) from both private and governmental investments was gathered. Many people invested their layoff severances, compensation for lands expropriated by the government and retirement pensions into this capital. Some received loans from the bank and put the money into this capital for higher return. In less than three years, over 3 billion yuan ($ 438 million) from tens of thousands of people was raised.
Around the end of July, some top local officials took out their investment and interest of 300 million yuan ($ 43.8 million) from the capital. This triggered an avalanche of withdrawal as people rushed to take out their own investments. Within half a month, 700 million yuan ($ 100 million) were withdrawn. Short of cash, the developers were no longer able to pay their investors.
Up to now, there are at least 20 developers that are involved in this fund raising. More than 50 individual business owners and even some gambling syndicates (it is popular in that area now) are also involved. The financial market in this region of 2 million people has been ruined by this fundraising.
In the protests, investors who had lost substantial amounts of money, shouted, “give my money back” and some threatened to commit suicide. A large number of investor blocked the road to enter the Xiangxi Prefecture. People occupied railways and stopped trains, hoping to raise awareness of top officials in Beijing.
