A deeper worry started to set in this summer, after the government warned about the risk of losses.
“High returns mean high risks,” Guo Shuqing, the chairman of China’s Banking Insurance Regulatory Commission, said in June in public remarks at a conference. Any product that offers an 8 percent return, Mr. Guo said, is “very dangerous.” Investors in products with returns of 10 percent or more, he went on, should “be prepared to lose all the principal.”
Almost immediately, the concerns prompted a run on the industry, as investors demanded their money back. A wave of defaults followed, with each collapse setting off the next, like a set of dominoes.
Some executives shut down their businesses and fled with client money, while others suspended operations following a flood of demands from investors for repayment. Many are now under investigation.
In early July, Money Pig, a company based in the southern city of Shenzhen, notified tens of thousands of investors that their accounts had been suspended. Trying to get their money back, investors gathered at a police station there a few weeks later. The group of office workers, students and businessmen wore face masks, sunglasses and white T-shirts that read, “Give me my hard-earned money back!” and “Government, save our investors!”
“I started to panic,” said Chen Shuaipeng, 30, a salesman who flew to Shenzhen for the protest from the eastern city of Tianjin. He said he had $93,000 of savings in a Money Pig account before it was frozen.
In Hangzhou, a group of investors who showed up to talk to officials was large enough to fill two sports stadiums, according to state news media reports. Others have gathered to protest in Nanjing and Shanghai, according to news reports and widely circulated videos online.