As China’s economy continues to decline, the financial pressure on the Chinese Communist Party (CCP) is increasing, prompting local governments to come up with various ways to boost revenue. Recently, a professor at a Chinese university published an article revealing that local governments are using disciplinary departments to detain entrepreneurs and extort money to release them in order to generate fiscal income. He believes that this practice will lead to a national economic disaster.
You can read the full article on the financial news section of Sina on September 25. The article titled “Urgently Prohibit and Stop the Practice of Local Governments Supplementing Fiscal Revenue by Detaining Entrepreneurs and Extorting Money” was written by Professor Zhou Tianyong, Director of the National Economic Engineering Laboratory at Northeast University of Finance and Economics. He previously served as Deputy Director of the International Strategic Research Institute of the CCP Central Party School.
According to Professor Zhou Tianyong, local governments at various levels are facing financial difficulties, and party committees at the local levels have assigned tasks to various party, government, and judicial institutions to supplement local fiscal revenue.
The article points out that while the situation of income and expenditure and debt repayment pressures may be understood, allowing local disciplinary committees to detain entrepreneurs suspected of bribery or false reporting, and then extorting money to release them to gain fiscal revenue, will inevitably lead to another economic disaster.
The article also mentions the massive crackdown on small and medium-sized private enterprises initiated by the former Ministry of Agriculture, Ministry of Personnel, and Ministry of Housing, leading to closure of businesses, job losses, reduced income, and decreased consumption, which has left the national economy in a precarious situation.
Professor Zhou Tianyong observes that local disciplinary departments are generally detaining key local private enterprises. Some entrepreneurs, when detained, affect the normal operation of their businesses, causing banks and other creditors to pressure for repayment, leading to a decline in the stock prices of listed companies, reduced acquisition of companies, suppliers hesitant to provide goods, instability among management and employees, resulting in many closures. Even after releasing the entrepreneurs, some companies, having suffered financial loss, start considering transferring remaining assets abroad.
The article indicates that local disciplinary departments, through detaining entrepreneurs, find it easy to make money with considerable amounts, and no one dares to stop them. If this practice spreads, causing the collapse, shutdown, or relocation of private enterprises nationwide, then regardless of how many policies are enacted to support the development of private enterprises or how much deficit is implemented by the Ministry of Finance, it will not significantly aid in reviving the national economy.
Professor Zhou Tianyong urgently calls for local party committees and governments to immediately cease and prohibit the practice of using local disciplinary committees to detain entrepreneurs and extort money in exchange for their release in order to generate local fiscal revenue, to prevent it from causing a national economic disaster.
After the article by Professor Zhou Tianyong gained attention online, both Sina Finance and Sina Weibo deleted his article.
Many netizens have commented on this issue, questioning whether such behavior constitutes extortion and whether the local governments engaging in such conduct are acting illegally. They also raise concerns about the policy implementation that allowed such practices to happen in the first place.
The exposure of government scandals, as revealed by Professor Zhou Tianyong, has been referred to by netizens as “extortion,” with a similar event in Guizhou previously labeled as “criminalizing debts.”
In February of this year, according to China Business News, Ma Yijia, a female entrepreneur from a minority ethnic group, was criminally detained by local authorities in Liupanshui City, Guizhou Province, on suspicion of “provoking trouble” after initiating legal action to claim payments for her work on government projects.
Before Ma Yijia’s arrest, more than ten individuals, including her lawyers and legal assistants, who were representing her in debt collection matters, were also criminally detained, all on charges of “provoking trouble,” which is known as a catch-all charge.
The incident sparked widespread public attention after its exposure. The Liupanshui City government denied the reports, but as the situation escalated, the authorities announced a decision not to prosecute and released Ma Yijia and others.
The former top official of Liupanshui City, Li Zaiyong, who was ousted from his position, oversaw numerous image-building and achievement projects, many of which remain unfinished. During his tenure of over three years, the local debt increased by over 150 billion yuan.
Prior to Ma Yijia’s arrest, the Liupanshui City government, to manage local debt risks, introduced comprehensive debt restructuring policies last year to ease the repayment risks of due debts. However, whether these debt restructuring policies involved “criminalizing debts” remains unknown.
As mentioned by Professor Zhou Tianyong, local governments utilizing disciplinary departments to generate fiscal income, a similar case in Heze, Shandong, has been exposed for using the Market Supervision Bureau to extort money under the guise of combating pyramid schemes.
Just a month ago, the Market Supervision Bureau in Chengwu County, Shandong Province, confiscated illegal gains and imposed massive fines on three companies based outside of the province, including Baok (Tangshan) Medical Technology Group Ltd., under the pretext of combating online pyramid schemes.
Speaking to the company’s attorney, investigations revealed that since 2020, the Chengwu County Market Supervision Bureau has frozen a total of 781 million yuan in deposits under the names of several out-of-town companies based on allegations of pyramid schemes, creating an “anti-pyramid economic” activity in the county. Such practices involve government agencies creating jurisdictional oversight, fabricating cases, and enforcing laws for their own gain.
In reality, Shandong’s Chengwu County is not the only case of using the pretext of combating pyramid schemes to extort money. Hubei’s Tianmen City is also familiar with this method. According to sources, what officials termed “anonymous reporting” often involves local authorities sending people to infiltrate relevant sales platforms, gather so-called evidence, and then use that to impose penalties.
As these incidents continue to unfold, the public remains vigilant about such unjust practices and hopes for transparency and justice within the system.