The Chinese Communist Party’s local public security forces have been frequently crossing borders to carry out opportunistic law enforcement actions against entrepreneurs, a practice dubbed “long-distance fishing,” which has sparked public grievances. Chinese Premier Li Keqiang recently admitted to inappropriate law enforcement practices and the abnormal growth of “fines and confiscations.” He stated that next year, there will be a launch of a “campaign to standardize law enforcement involving enterprises.” Experts believe that under public pressure and criticism, the CCP is forced to make some adjustments, but it may not effectively resolve the issues at hand, and it also involves conflicts between central and local authorities and internal power struggles at the higher levels. Minister of Public Security, Wang Xiaohong, has shown ambiguous attitudes towards the situation, having been accused of not considering the weakened position of Premier Li Keqiang.
According to Xinhua News Agency, Li Keqiang, during a special study session on December 16th, emphasized the need to standardize administrative law enforcement and address cases of abnormal growth in fines and confiscations (combined fines and confiscations), extensive out-of-town law enforcement, and heavy maximum penalties. He also stated that there will be a specialized campaign to standardize law enforcement involving enterprises next year.
Officially defined, “fines and confiscations income” refers to various revenues collected by law enforcement departments, including fines, confiscated funds, proceeds from confiscated goods, and illicit gains, involving general fines and confiscations such as those related to public security, traffic, taxation, courts, market regulation, as well as smuggling-related fines and confiscations by public security and market authorities. Fines and confiscations income belong to the local government’s non-tax revenue.
Recently, numerous incidents of “long-distance fishing” have arisen across China, where local public security forces have unlawfully and irregularly arrested private entrepreneurs in other regions, leading to asset seizures, asset freezes, and even fatalities, becoming a focal point of social controversy.
In November of 2023, the Beijing prosecutor’s office reported a rare case of provincial public security forces attempting “long-distance fishing” in the Jiangsu and Zhejiang regions. Two implicated police officers have been sentenced, although the province they were from was not disclosed.
In November 2023, the general manager of a gaming company in Beijing, Xing Yanjun, was detained across provinces by the police of New Barag Left Banner in Inner Mongolia. Although cleared by the prosecution in December, he was still monitored by the police and unexpectedly passed away in April of the following year. His family questioned whether Xing Yanjun was one of the victims of the recent “long-distance fishing” incidents by the police.
Before Li Keqiang’s statement, the Central Economic Work Conference of the CCP held earlier this month proposed the initiation of a “special campaign to standardize law enforcement involving enterprises.”
China affairs expert Wang He stated on December 19th that the central and local authorities have been in a continual power struggle over the years, and the conflict between them has reached a critical point. Particularly with severe local debt crises and unprecedented financial difficulties at the local level, authorities have resorted to seeking additional revenue through tactics like “long-distance fishing.”
Wang He mentioned that theoretically, the State Council of the CCP should have stepped in long ago to rectify the situation of “long-distance fishing” to assert central authority. However, since Li Keqiang took office, the powers of the State Council have been significantly diminished. With Li Keqiang already in a weakened position, the situation has become even more challenging. Therefore, addressing the issues is now imperative, but the effectiveness remains doubtful as it only involves rhetoric, issuing documents without actual accountability, with local authorities free to interpret and act on them as they see fit.
Regarding Li Keqiang’s announcement of initiating a crackdown operation next year, political commentator Lan Shu expressed to Dajiyuan that many local governments of the CCP are heavily indebted, prompting them to ramp up fines and confiscations to address their financial difficulties. As a result, social tensions escalate, forcing the higher echelons of the CCP to make a superficial show of addressing the situation without fundamentally resolving the core issues.
“The problems cannot be resolved. If you prevent local governments from these actions, they will demand funds from you. However, you (the central government) do not have the funds either, so ultimately, the outcome will be inconclusive,” Lan Shu stated.
As early as October 8th, Li Keqiang had emphasized during a symposium the need to curb irregular out-of-town law enforcement and opportunistic law enforcement. In October of this year, Zheng Zhiguo, Director of the National Development and Reform Commission of the CCP, stated during a press conference at the National Information Office approaches to routinely caution regions experiencing abnormal growth in fines and confiscations and conduct inspections when necessary.
However, based on current reports, Li Keqiang’s directives issued two months ago and the warnings from the National Development and Reform Commission have yet to yield results.
Fines and confiscations have long been a contentious issue in the CCP. In recent years, with the Chinese economy facing a downturn and local financial constraints worsening, exorbitant fines have been imposed in many regions. For example, an elderly person received fines totaling 100,000 yuan from the local market regulatory department for making only 14 yuan from selling unqualified celery. In 2021, an official publication of the CCP, “Ban Yue Tan,” reported that a mountainous county in northern China generated over 30 million yuan in traffic violation fines, while the local public budget revenue was just over one billion yuan.
Liu Chengliang, a research fellow at the Suzhou University Dongwu Think Tank and associate professor in political science and public administration, disclosed in October of this year that in 2022, fines and confiscations income nationwide amounted to 428.3 billion yuan, reaching a ten-year high. He attributed the abnormal increase in fines and confiscations income to the long-term heavy reliance of local finances on land-related revenues, as well as the impact of the weak housing market in recent years. Additionally, the insufficient transfers of funds from the central to western regions resulted in fines and confiscations becoming an expedient measure to compensate for financial shortfalls.
Yeifang.com reported on December 17th that fines and confiscations income constitute non-tax revenues in local public budgets, accounting for approximately 10% of non-tax revenues, with non-tax revenues demonstrating rapid growth this year. According to data from the Ministry of Finance, in the first eleven months of this year, non-tax revenues amounted to around 3.7 trillion yuan, a 17% increase over the same period last year. In October and November, non-tax revenues increased by about 40%. From data released by some provinces, fine and confiscation incomes in some regions have also seen double-digit rapid growth.
Earlier reports by Yeifang.com indicated that in 2023, fines and confiscations income had significantly increased in seven out of sixteen provinces, with Chongqing and Beijing increasing by 22.4% and 21.9% respectively. Many local governments have ceased publicizing their fine records.
Fining has been a long-standing practice among various departments of the CCP; however, it was not until February of this year that the CCP issued the “State Council’s Guiding Opinions on Further Standardizing and Supervising the Setting and Implementation of Fines.” Red Star News mentioned that this was the first time in China that norms had been established for the setting and implementation of fines in administrative laws and regulations.
According to reports from mainland China, the “Seven Prohibitions” by public security organs in 2021 specified the strict adherence to cross-regional collaboration procedures, prohibiting violations and illegal contentions over jurisdiction in cases involving income from fines and confiscations. In October of this year, the Ministry of Public Security of the CCP publicly released the “Several Regulations on Regulating the Application of Freezing Measures on Funds in Handling Criminal Cases,” emphasizing the prohibition of freezing funds before filing a case and exceeding the limits of authority, scope, amount, and duration for freezing funds.
However, it seems that the “guiding opinions” of the State Council and these regulations by the Ministry of Public Security have not had the desired impact.
Former Beijing lawyer and Chair of the Canadian Friends of Democracy, Lai Jianping, expressed to Dajiyuan that extensively confiscating funds through revenue generation has been a longstanding issue within the CCP; it is just that in recent years, this behavior has become particularly excessive due to the drying up of state finances. When entrepreneurs voice complaints that threaten the regime’s stability, the top echelons of the CCP superficially conduct campaigns to clean up the situation, giving an impression of rectification and improvement at the higher levels. However, this process is cyclical, recurring once some time has passed.
“Abusing power, seeking rent, and then inspecting and rectifying from above, these actions are characteristic manifestations of the CCP single-party dictatorship — only when the CCP’s authoritarian rule is eradicated can these issues fundamentally be resolved,” he stated.
The CCP’s official People’s Daily published a critique on December 16th condemning “long-distance fishing” and labeling the out-of-town police as “outsiders’ black hands,” highlighting that “long-distance fishing” severely erodes the confidence of private enterprises and must be eradicated with decisive measures, and so forth.
Lai Jianping remarked that these official statements are a rehash of old tunes because the CCP does not genuinely intend to establish a fair business environment that allows enterprises autonomy in their operations. Instead, the aim is to exercise control over the market order without implementing a true free market economy under the rule of law. Criticizing these irregularities is merely a stopgap measure.
Based on public reports, since the controversy surrounding “long-distance fishing” began, Wang Xiaohong, Minister of Public Security of the CCP, has not publicly declared his stance on the matter.
Wang Xiaohong is considered a close confidant of Xi Jinping from Fujian. Over the years, after taking over the Public Security Department, he replaced all the heads of local public security bureaus, with some commentators even referring to the police force as the “Wang Family Army.”
Wang He stated that Wang Xiaohong is a prominent figure close to Xi Jinping, wielding considerable real power. As a member of the Central Committee of the CCP and a State Councilor, he is the most powerful Minister of Public Security since Zhou Yongkang. With the support of Xi Jinping and control over the armed forces, Wang Xiaohong holds significant authority, often ignoring Li Keqiang’s directives. Wang He analyzed that the flagrant actions of the Public Security Bureau in “long-distance fishing” involve factors from local governments and the Public Security Bureau. As local public security falls under the dual leadership of the Public Security Bureau and local Party committees, with the Public Security Bureau mainly providing operational guidance, if issues arise within the local public security system, Wang Xiaohong bears responsibility and should be held accountable. Ideally, Wang Xiaohong should personally address and acknowledge these issues to demonstrate their importance; however, this has not materialized, showcasing his ambiguous stance. Instead, Li Keqiang was compelled to intervene, disrupting the political norms within the CCP.
“Wang Xiaohong and Li Keqiang are at odds; Wang is shifting the blame to Li Keqiang, representing internal disputes within the Xi faction, indicating that the CCP has entered a crisis mode,” he remarked.