China's Police Are Preying on Small Firms in Search of Cash

Chinese police are increasingly targeting small businesses across provincial borders to collect fines, a practice described as "profit-driven law enforcement." This trend has emerged as local governments face significant budget shortfalls due to declining tax revenues and a struggling housing market. In one notable case, police from Guangdong Province detained employees of a social media company in Wuhan, coercing them to transfer over $41 million under the pretext of illegal gambling activities, which the company denied. The term "offshore fishing" has been used to describe this predatory behavior, likening police actions to fishermen seeking easy catches. The central government has acknowledged the issue, instructing local officials to regulate such practices, but many business owners remain skeptical of genuine reform. Reports indicate that local governments are resorting to aggressive tactics, including imposing hefty fines and back taxes, to fill budget gaps. The situation has worsened since the pandemic, with many businesses feeling vulnerable to arbitrary actions by law enforcement. Despite government assurances to support the private sector, entrepreneurs express distrust, viewing local authorities as opportunistic and predatory. The freezing of bank accounts of merchants in Yiwu, a major wholesale market, has further exemplified the challenges faced by small businesses, leading to significant financial paralysis. The intertwining of police and local government interests complicates the enforcement of the rule of law, leaving many businesses at the mercy of local officials.

- Chinese police are targeting small firms for fines amid local government budget shortfalls.

- The practice is referred to as "profit-driven law enforcement" or "offshore fishing."

- Local governments are increasingly using aggressive tactics to collect revenue from businesses.

- Many entrepreneurs express distrust in government promises to support the private sector.

- The freezing of bank accounts has severely impacted small businesses, particularly in Yiwu.