In China, the economy has been on a downward trend and fiscal tensions are high, leading to a disturbing trend of local governments across provinces “looting” private companies from other regions. Since the beginning of this year, more than 80 executives from listed companies have been arrested, with this behavior in China’s legal circles being termed as “distant-water fishing”.
According to a report from the Financial Times on December 28, Chinese securities regulatory agencies typically require listed companies to disclose situations where major shareholders, chairmen, CEOs, and other top executives have been detained by the police. Through analyzing relevant documents, the report found that in 2024, there were as many as 82 cases of personnel from listed companies being arrested, with about half of them involving local authorities from other regions or unspecified locations.
These figures indicate that law enforcement agencies in multiple regions have taken more extensive actions to arrest executives of related companies nationwide.
Analysts cited in the report warned that although the high number of arrest cases may be related to deteriorating fiscal conditions and economic downturn in local governments, the opaque law enforcement system of the Chinese Communist Party is evidently exacerbating concerns over the safety of entrepreneurs and investors.
In recent years, the controversial practice of “distant-water fishing” pursued by local Chinese governments under fiscal pressure has sparked debates.
On October 16, the China Times revealed a report from the Guangdong Provincial Investigation and Research Center, released in April, stating that cities in the Pearl River Delta region such as Guangzhou, Shenzhen, and Dongguan have become high-incidence areas for remote law enforcement by public security. Taking Guangzhou as an example, since 2023, nearly 10,000 enterprises including Pupu, Yijiankang, and Jiujun have been victimized, the vast majority of them being private companies, with most cases showing obvious profit-driven enforcement motives.
According to China’s Ministry of Finance official website, from January to September this year, the national general public budget revenue decreased by 2.2% year-on-year. Among them, tax revenue decreased by 5.3% year-on-year, state-owned land use rights transfer income decreased by 24.6% year-on-year; meanwhile, non-tax revenue mainly in the form of “fines” increased by 13.5% year-on-year.
On October 8 this year, a symposium chaired by Chinese Premier Li Keqiang emphasized the need to curb violations of cross-regional law enforcement and profit-driven law enforcement.
David Wong, an economic scholar living in the United States, previously told Epoch Times that Beijing has always been aware of such issues, but relies on local governments to implement its policies and relies on public security to maintain regime security, hence it dares not excessively suppress local governments and local law enforcement and judicial branches. Due to tight local finances, the violent organs in localities are sustained by local financial resources.
Wu Shaoping, a human rights lawyer in the United States, previously told Epoch Times that public security personnel conducting “distant-water fishing” in other regions are rewarded for the increased income brought to the local finances, essentially encouraging such actions everywhere, and this is the result of the Chinese Communist Party’s tolerance.