Local governments in China have reportedly been engaging in a practice dubbed “deep-sea fishing” (远洋捕捞) wherein they conduct law enforcement operations outside their jurisdictions to address local budget shortfalls. This practice involves, for example, freezing company assets or imposing fines under pretenses such as fraud allegations.
The issue is particularly severe in the Pearl River Delta region of Guangdong. According to a research center in Guangdong, nearly 10,000 businesses in Guangzhou, mostly private enterprises, have been affected by these cross-jurisdictional law enforcement actions since last year.
A notable example is the Guangzhou Yijiankang Group, a company with annual revenue of 2.423 billion yuan (approximately $334 million). The company was targeted by Henan police under fraud allegations, which prevented its planned Hong Kong IPO. Despite having original case amounts of only 600,000 yuan (approximately $83,000), authorities froze 64 company accounts, forcing the company to withdraw its IPO application and halt factory operations.
This trend is reportedly driven by local fiscal pressures, with local governments using fines from these cases to determine budget allocations for law enforcement departments. The practice has severely damaged the business environment and government credibility.
The issue has caught Beijing’s attention. On October 8, the head of the National Development and Reform Commission, Zheng Shanjie, called for standardizing cross-jurisdictional law enforcement and preventing selective and profit-driven enforcement. On October 30, the Ministry of Public Security issued new regulations to standardize the freezing of assets in criminal cases.
Source: Central News Agency (Taiwan), November 4, 2024
https://www.cna.com.tw/news/acn/202411040041.aspx