Authorities should strictly follow the law when probing business figures

When it comes to entrepreneurship, China’s successful private entrepreneurs should rank among the world’s most resilient. To thrive in an environment where they are treated as second-class citizens compared to state-owned enterprises, they must navigate significant challenges: limited access to markets and bank credit, unpredictable government policies, sudden and severe regulatory crackdowns, bureaucrats exploiting power for personal gain, frequent harassment from administrative agencies like health and fire safety departments, and societal and ideological pressures because of their wealth. However, even the most resilient have their limits. Since April, at least five prominent business leaders in their 50s in Zhejiang, Hubei and Guangdong provinces have reportedly taken their lives by jumping to their deaths. This has sparked concern and soul-searching across China about how to support the beleaguered private sector and protect its entrepreneurs. Among them, the death of Wang Linpeng, the 57-year-old billionaire chairman of Easyhome, China’s leading home furnishing company, has drawn significant attention. Not only is Easyhome a household name, the circumstances surrounding Wang’s death are particularly disconcerting. According to company announcements and mainland media reports, Wang died by suicide on July 27, just days after being released by Hubei authorities. On April 17, Easyhome disclosed that Wang had been detained by anti-corruption investigators, with his company shares frozen. On July 23, just days before his death, the company announced that his detention had been lifted and he had resumed his duties. The reasons for Wang’s detention remain unclear. However, these tragedies have intensified concerns that local authorities, grappling with budget deficits, are still targeting private businesses through profit-driven law enforcement, effectively turning investigations into money-making operations. Compounding the tragedy, these deaths come at a time when many believe the worst period for China’s private sector has passed. Private businesses endured a double blow of stringent zero-Covid policies and harsh regulatory crackdowns on sectors such as technology, gaming and private tutoring, with authorities criticising the private sector for perceived excesses and “barbarian growth”. These developments drove private sector confidence to historic lows, yet signs of improvement have emerged since the beginning of this year. In February, China’s top leaders convened a high-profile symposium with influential tycoons, pledging full support for the private sector, the first such meeting in seven years. In May, Beijing passed a law to bolster private enterprises, recognising their critical role in driving economic growth and vowing to protect their rights. As Beijing is drafting the 15th five-year plan and is expected to attain a 5 per cent annual growth rate in the next five years, a vibrant private sector is critical to achieving the goal. Private businesses contribute 60 per cent of China’s gross domestic product and account for more than 80 per cent of total employment. Moreover, the success of DeepSeek AI and booming sales of China’s electric vehicles show that private businesses now lead China’s innovation efforts, well ahead of state-owned enterprises. Despite these positive developments, the recent deaths highlight a gap between Beijing’s promises and on-the-ground realities. China’s aggressive anti-corruption campaign, while necessary, has inadvertently exacerbated the challenges. In the first two decades of China’s economic reforms, the private sector emerged in a loosely regulated environment where corruption was rampant. Many private firms resorted to practices such as tax evasion, smuggling or bribing officials to secure project approvals or licences. Historically, anti-corruption efforts targeted corrupt officials while sparing the businesspeople who paid bribes. However, in recent years, the campaign has shifted to address collusion between officials and entrepreneurs, leading to the prolonged detention of numerous private business leaders, often without any reasons given. Meanwhile, there have also been cases of private entrepreneurs prevented from leaving China, despite not being the target of an investigation – instead, being connected to other cases under investigation – a move known as an exit ban. The impact of such detentions or bans is profound for private firms. At state-owned enterprises, the removal of senior executives is unlikely to affect operations. For private companies, the detention of a founder or owner can be catastrophic as their reputation and finances are often tied to the individual. A private firm targeted by anti-corruption investigators can have its corporate accounts frozen, halting operations and potentially leading to lay-offs and the company’s collapse. A particularly troubling development is the expanded use of liuzhi detention, a measure originally designed to detain state or party officials for up to six months without formal charges, often in secret facilities. This practice has now been extended to private and foreign business figures. Wang’s reported suicide and its ripple effects should serve as a wake-up call for Chinese authorities. While tackling collusion between officials and entrepreneurs is essential, the government must exercise restraint when targeting the private sector, taking into consideration historical context and the larger picture of social stability, given that private firms are the country’s largest employers. Moreover, while the Communist Party might have its reasons to use liuzhi to tackle internal corruption, it should refrain from expanding its use to cover business owners who are not party members or foreigners, which contradicts Beijing’s pledge to uphold the rule of law. Even if the authorities have the evidence required to pursue charges against business figures, they should strictly follow the law and allow the accused to have access to lawyers. These are necessary steps to restore the confidence of private business owners on whom Beijing is relying to drive economic growth.

Authorities should strictly follow the law when probing business figures

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Reports of Chinese business leaders taking their lives have sparked concern over how to support the beleaguered private sector and protect its entrepreneurs

Reports of Chinese business leaders taking their lives have sparked concern over how to support the beleaguered private sector and protect its entrepreneurs