China’s economy continues to decline and there have been reports of increased crackdowns on private entrepreneurs despite signals of support from the Chinese Communist Party (CCP). According to a disclosure by the British media outlet “The Economist,” Chinese entrepreneurs are mysteriously disappearing at an alarming rate, with nearly one person being arrested every week.
On September 21st, Zhejiang Zhenlei Technology announced that its actual controller and chairman, Yu Faxin, was suddenly placed under official “custody.” Yu Faxin is a Chinese scientist and entrepreneur specializing in advanced semiconductors for military applications.
“The Economist” reported on October 8th that Yu Faxin has been taken away by the CCP’s anti-corruption agency and is currently in a state of “custody,” a form of extralegal detention where more and more Chinese entrepreneurs are being implicated.
The report pointed out that Chinese entrepreneurs are facing increasing worries. The economy has not fully recovered from the pandemic, with subdued consumption, overproduction, rampant internal competition, and shrinking retail sales. With the bleak economic outlook, the systemic flaws of the CCP are making life more unbearable for business elites. Official investigations into company executives are on the rise, and court rulings restricting their domestic travel freedom are also increasing. The numerous incidents of business owners committing suicide this year are widely seen as evidence of escalating pressure.
In the past, the CCP’s discipline inspection commission used “shuanggui” (a form of extrajudicial detention where the accused must explain their alleged crimes at a designated time and place) to capture individuals. However, under Xi Jinping’s administration since 2018, this has transitioned to “custody” carried out by the supervisory commission system. The new custody detention system, like shuanggui, allows for the solitary confinement of suspects with a lack of independent oversight mechanism. The scope of custody enforcement is broader than shuanggui, extending from officials, public servants to managers in public schools, hospitals, sports organizations, cultural institutions, and state-owned enterprises, and can even detain ordinary people suspected of corruption.
The Spanish NGO “Safeguard Defenders” stated that “custody” is similar to Residential Surveillance at a Designated Location (RSDL), where solitary confinement is carried out in secret locations, with a maximum duration of up to six months. However, “custody” operates completely outside the legal system, and the individuals involved are even denied the right to hire a lawyer. Although many victims may not be party members, their treatment appears to be incorporated into party affairs.
According to “The Economist,” the cells where detainees are held usually lack windows, with lights constantly on, and detainees are under surveillance 24 hours a day, even when using the restroom.
The report highlighted that top executives of listed companies are disappearing rapidly within this harsh system. As of the end of September, there were 39 such cases, equivalent to one case per week, surpassing last year’s record. This is just the tip of the iceberg as most individuals under custody work in non-listed companies, where companies are not required to explain their disappearance to investors.
Official CCP data shows that in 2024, the total number of individuals held in custody, including officials and businessmen, surged by nearly 50% to approximately 38,000.
According to consultancy firm Gavekal Dragonomics, the number of cases expected to be filed this year could reach a record-breaking one million. “The Economist” analyzed that one of the reasons for the detention of so many business owners is the rapid expansion of Xi Jinping’s anti-corruption campaign.
The report suggests that sluggish economic growth may be one of the reasons for the increase in detentions. With many local governments heavily indebted, authorities are resorting to what is termed as “deep-sea fishing,” where investigators can seize the assets of entrepreneurs (and their companies). Among the 39 listed company executives approved this year, more than half were detained outside their local jurisdiction.
Another problem troubling Chinese entrepreneurs is being blacklisted for “dishonesty,” whereby courts often restrict them from engaging in “high consumption” to compel debt repayment. Those on the blacklist are prohibited from taking flights, high-speed trains, or staying in luxury hotels.
Data from Chinese courts shows that by the end of September, approximately 200,000 people have been added to the blacklist this year, higher than the approximately 17,400 people in the whole of 2019 before the pandemic outbreak.
Tragic incidents of suicide among Chinese entrepreneurs further darken the situation. Between April and July this year, at least five prominent bosses jumped from high-rise buildings to their deaths.
The CCP government claims to be striving to improve conditions for entrepreneurs. In February of this year, Xi Jinping personally met with entrepreneurs, and the authorities have enacted the “Promotion of Private Economic Development Law.”
However, according to British media reports, the emotional state of the entrepreneurial community remains low. Recently, Wang Jianlin, a former Chinese billionaire real estate tycoon, was blacklisted as a debt defaulter due to a contract dispute. Although the ban was lifted a day later, it has sparked discussions about the severe predicaments faced by some business leaders.
Chinese issues expert Wang He previously told Epoch Times that the predicament of private entrepreneurs under the CCP ultimately stems from the regime’s thuggish nature. While claiming to support private enterprises, the CCP’s lack of judicial independence results in even harsher repression of businesses in the end.