Chinese Panic Buying Spree Clears Shelves

Residents of Harbin in northeastern China, fearful of rising inflation, have gone on a massive spending spree, triggering the worst reported bank run there since the 1949 revolution, the official China Consumer News said.

In the most graphic official account so far of panic buying, the paper, which reached Beijing today, said that hundreds of nervous people cleared department stores of goods lying unsold for years.

In July, Harbin’s biggest department store sold $297,000 worth of electrical appliances, 200 times its monthly average.

The bank run began on July 25 with long lines waiting outside banks. In three days, residents withdrew $3.38 million, which the newspaper said was the largest amount withdrawn in Harbin in 39 years of Communist rule.

Official figures show inflation in the first half of the year rose 13% from the same period a year ago, with a 19% increase in June. Prices for top quality cigarettes and liquor had risen up to six-fold at the end of July.

Interest Rates Lag

But bank interest rates have fallen way behind, only 7.2% for one-year fixed deposits for individuals.

The China Consumer News said hundreds of people lined up outside department stores before they opened to snap up black and white television sets and tape recorders that had been in stock for years.

The newspaper blamed rumors of more price rises for the panic.