Local governments within China are strained financially due to their significant loss of tax revenue. Key industries the regime once relied upon for taxes have struggled with financial hardships while real estate companies have experienced successive defaults.
To address this matter, local government officials within the Chinese Communist Party (CCP) have begun targeting the incomes of affluent executives and entrepreneurs.
Chinese entrepreneur Hu Liren, who currently resides in the United States, told The Epoch Times on Nov. 16 that asset seizures from the wealthy and entrepreneurs have been ongoing but are now becoming overt and widespread. He emphasized that the threshold of 30 million yuan is not considered wealthy, particularly in the affluent regions of eastern China, such as Shanghai, Jiangsu, and Zhejiang provinces, where numerous billionaires reside.
Tax Investigation and Extortion Provoke Suicide
The recent suicide of Cheng Yong, the chairman of the privately-owned enterprise Changzhou Huali Hydraulic Lubrication Equipment Co. in Jiangsu Province, has sent shockwaves through the business community.
Mr. Cheng’s posthumous writings, along with statements from his family and colleagues, suggest that he fell into a trap during the investigation into Mr. Yang’s affairs.
Summoned for three consecutive days, Mr. Cheng was informed that Huali must return over 8 million yuan allegedly given to him by Mr. Yang. In an attempt to resolve the matter, Mr. Cheng provided a confession, believing that paying the money would bring an end to the situation.
Mr. Cheng told his family that during the interrogation period, he was only allowed to sleep for one or two hours each day. In his suicide note, he expressed unbearable suffering in the interrogation room, where each day felt like an eternity. He stated, “Just want to pay the money and leave as soon as possible,” and “end the questioning sooner.” However, Mr. Cheng was later accused of having other issues. “There is still more to come; I feel too tired. Take a step ahead. Goodbye,” he wrote in his will.
Mr. Cheng’s family and employees denied the accusations, asserting that Mr. Yang never provided money to Mr. Cheng. They suggested Mr. Cheng chose death as a way to prove his innocence. Some members of Huali’s management argue that Mr. Cheng, coerced into signing a false confession, was deceived, and his overwhelming guilt led to his suicide.
Huali, a family business founded by Mr. Cheng’s father, specializes in mechanical manufacturing services and the research and development of lubrication equipment. Mr. Cheng, a CCP member and accomplished entrepreneur, took over the company in 2010, doubling its revenue. Despite his success, he faced undue pressure during the investigation.
The local community had a positive view of Huali, as the company allowed senior employees to invest, sharing dividends with them. However, some government leaders harbored jealousy, seeking to reclaim shares from workers and transfer them to government leaders, according to a local private enterprise owner, Xiao Peng (anonym), who spoke to The Epoch Times.
Chinese entrepreneur Meng Jun, who resides in the United States, noted on Nov. 16 that as local governments in China face financial constraints, they target private business owners and wealthy individuals. Some businesses are unable to withstand tax investigations.
Deteriorating Hope for China’s Affluent Individuals
Mr. Cheng’s suicide note reveals his despair about the impending forced investigations. It sheds light on the bleak outlook for affluent individuals in China, once again bringing attention to the escalating crisis they face.Before Mr. Bao’s disappearance, he was repeatedly summoned in connection with the case of Cong Lin, the former president of Huaxing Capital. Mr. Cong, who chaired the wholly owned subsidiary of the Industrial and Commercial Bank of China, ICBC International, in Hong Kong, was taken away for investigation in September 2022.
Insiders have indicated to overseas media that Mr. Bao faced inquiries about a loan arranged for the company before Mr. Cong joined Huaxing Capital. However, Mr. Bao did not provide all the requested information, leading to his placement under “liuzhi,” a form of special detention that can last up to six months. During this secretive process, individuals are isolated without the ability to meet anyone, including lawyers, and are vulnerable to the illegal collection of evidence.
This trend continues with the recent disappearances of two more individuals. Chen Shaojie, CEO of the live-streaming platform DouYu, who has been missing since October, and Zhao Bingxian, chairman of Wohua Pharmaceutical, who has been subjected to liuzhi for as-of-yet unknown reasons.
According to Meng Jun, the survival environment for private entrepreneurs in China has been progressively worsening. With no optimistic expectations for China’s overall economy, the authoritarian system poses significant challenges. Entrepreneurs often find it challenging to avoid collusion with officials, as regime demands for a share become inevitable for successful enterprises. Failure to comply leads to intensified pressure and compromises, making survival increasingly difficult.
Mr. Meng emphasizes that regime officials are not concerned about the economy; rather, they are exploiting it for personal gain. He asserts that China’s current state, from top to bottom, is riddled with corruption, likening entrepreneurs to lambs awaiting slaughter. The only viable option, according to Mr. Meng, is a quick escape and prompt liquidation of assets.
Hu Liren adds that China, under the control of the CCP’s military without the rule of law, is witnessing an extensive clampdown on the wealthy. Entrepreneurs face the stark choice of fleeing or surrendering, with imprisonment or execution looming otherwise. The CCP’s pursuit of a North Korean model, aiming to eliminate wealthy individuals, places all billionaires at risk, signaling a grim outlook for future economic development and rendering a complete resurrection impossible.
