China's central government is trying to curb a wave of local arrests of business executives, which has raised concerns among entrepreneurs and risks undermining efforts to boost economic growth.
A review of the files by the Financial Times found that senior figures in more than 80 companies listed on the Shanghai and Shenzhen stock exchanges were detained in 2024.
ChinaSingapore's securities regulator requires listed companies to disclose arrests of controlling shareholders, chairmen, CEOs and other senior managers, and the figures point to much broader actions against executives across the country.
Some of the arrests appear to have had little or no legal basis, and in many cases were carried out by authorities based far from the target's business operations, a practice that Chinese media have dubbed “long-range hunting.” “. One leaked official document from southern Guangdong province said thousands of companies in one city had been the targets of actions by authorities from other regions since 2023.
Premier Li Qiang this month called for stronger oversight of corporate law enforcement, saying the government would review areas with abnormal growth in income from fines and confiscations or high levels of enforcement outside its jurisdiction.
“Instances of abuse of administrative discretion and unfair implementation are still continuing in some areas and sectors,” Li said, according to the Xinhua News Agency. The Prime Minister added that it was necessary to address “the pressing issues raised by citizens and businesses.”
Analysts said the large number of arrests may be linked to the financial deterioration of local governments, which have suffered falling revenues from land sales amid a wave of protests. Property crisis at the national level Which also led to a slowdown in China's economic growth.
“My friends are under pressure from all sides,” said one major Chinese investor, who claimed that some local governments were reviewing residents' assets in order to target the rich with fines.
The investor, who refused to reveal his name and himself had to pay money to the local authority about a decade ago in order to obtain release from detention, said some areas had turned to “long-range hunting.”
Describing the positions of the local authorities, he said: “I accuse you of committing violations in my area, and I am coming to take you and pay you the price.” “It's like nationwide blackmail.”
About half of the 82 arrests related to listed companies in 2024 reviewed by the Financial Times involved authorities from another region or an unspecified location.
Eugene Weng, a lawyer at Shanghai-based Wintell & Co., said some of his clients had been subjected to law enforcement abuses by authorities from other regions, adding that such practices were Erosion of trust In the business environment.
“The feeling of anxiety has gone beyond imagination,” Wong said. “Entrepreneurs only think in the short term, getting profits as soon as possible rather than investing in their business and transferring money abroad as quickly as possible.
“This actually worsens tax revenues and jobs, causing local finances to fall into a vicious circle,” he added.
An internal report prepared for Guangdong provincial leaders in April, which was later leaked online, said cross-jurisdictional enforcement had ensnared a growing number of local companies.
Since 2023, nearly 10,000 businesses in Guangzhou have faced law enforcement from other regions, the report said, with the vast majority of cases involving private enterprises and a fairly clear profit-making motive.
A Beijing-based businessman said the arrests created a climate of fear among the founders. “It gets scary when you start knowing the people who have been arrested,” he said. “The government has to do something.”
China's opaque enforcement system exacerbates these concerns. The companies said they and the families of the detained executives received little information about their cases.
The board of Zhejiang Whyis Technology, a provider of “smart city” solutions, struggled to respond to a request from securities regulators in March for more information about the detention of CEO Ye Jianbiao.
In a filing, the council said that other than a notice from another city's anti-corruption bureau that Yee was “under investigation for work-related crimes,” neither he nor Yee's family had received “notices or other official documents,” nor had they received any notices or other official documents. “Aware of the progress or results of the investigation.”
Nine months later, the 51-year-old executive remains in detention. I could not be reached for comment. A company representative said they had no further information to provide regarding Yee's case, and that they would make an announcement once he is released.
Some provinces have begun to deploy efforts to protect private businesses. Prosecutors in eastern Zhejiang revealed last month that local police helped foil the kidnapping of a businessman named Chen by officers from another region.
After being kidnapped from his home, Shane fled from the police while being taken out of the province. The two officers outside the city, who initially claimed they were acting on the orders of their superiors, were then arrested by Zhejiang police and eventually jailed.
In some cases, detained executives have ended up in the hands of authorities in areas where they do not appear to have any business.
Zhang Jian, 55, has spent more than two decades developing Aima Technology Group into one of China's largest electric scooter manufacturers. His family's 73 percent stake in the group is worth about RMB19.5 billion ($2.67 billion), putting them at 247th on the index. China Rich List Compiled by the Huron Research Group.
But in October, Aima announced that the anti-corruption squad had arrested Zhang from the city of Chengde, hundreds of kilometers away from his home and company headquarters in Tianjin. Aima has no assets in Chengde, according to public filings.
“They say it's about his personal issues, but they won't tell us more,” said one of Aima's managers who asked to remain anonymous.
The manager said that Aima was able to send important company documents to Zhang to sign from detention, and that they hoped he would be released soon.
“A lot of detained presidents get out within two or three months,” the director said. “I can't say how long we'll be there, but that's the situation in the market.”
Data visualization by Haohsiang Ko
