As local governments in China contend with the country’s sluggish economy, some are reportedly shaking down successful private companies to supplement their coffers.
This coercive practice, known as “distant water fishing” (远洋捕捞), involves poorer inland governments reaching beyond their jurisdictions to “catch” companies based in wealthier coastal provinces. They accuse them of fraud or other wrongdoing, freeze and confiscate their assets, and then compel them to pay large fines.
A government-run research organization earlier published a memo suggesting that nearly 10,000 companies operating in the city of Shenzhen and elsewhere in Guangdong Province have suffered such “cross-jurisdiction law enforcement.” That memo, meant for internal circulation, attracted widespread attention after it was published in part in an October media report.
But it is evident Beijing has long known about the problem. The Chinese Communist Party's Central Committee pledged on September 26 to “standardize enforcement and regulatory actions related to enterprises.” The head of China’s top economic planner also reassured businesses on October 8 that “unauthorized and profit-driven enforcement measures” against private companies were prohibited.
A top economist, Zhou Tianyong (周天勇), had warned in late September that local governments across China have been extorting money from entrepreneurs using the Chinese Communist Party’s “disciplinary commissions.” These commissions, responsible for enforcing Party ideology and discipline, have detained entrepreneurs in their “liuzhi” detention system, where detainees are routinely tortured, intimidating them so they agree to pay the money demanded. Zhou’s post has since been deleted.
In recent years a growing list of wealthy and well connected people in China have gone missing, been imprisoned, or were otherwise punished for failing to adhere to the Party line. They include technology company Alibaba’s Jack Ma, investment banker Bao Fan, and tech company founder Chen Shaojie.
The Chinese government has sought to jumpstart its sputtering economy and restore business confidence by reiterating the Party’s support for private entrepreneurship.
But whatever reassurances the government may profess, in authoritarian systems where the laws are under the government’s control, nobody is truly safe.
