China’s Local Governments Are So Cash-Strapped They Use Police to Raise Revenue
China’s sluggish economy is driving cash-strapped local governments to seek unconventional sources of revenue. Their law enforcers have emerged as some of their biggest earners.
Local police and other enforcement agencies across China have been imposing larger and more frequent fines for traffic offenses, business and safety code violations, as well as other petty misdemeanors, as a way to pad local state coffers, according to state media. In some cases, local police forces pursued cases with few obvious links to their own jurisdictions, even going after alleged offenders hundreds of miles away, in what lawyers and state media say are gambits to seize allegedly ill-gotten gains.
Earlier this year, police officers from China’s northeastern borderlands drove more than 600 miles to Beijing to detain the founders of a video-streaming startup that they accused of engaging in illegal multilevel marketing. The company, Xueli Xingqiu, also known as Future Learning, in turn accused investigators of trumping up charges and overreaching their jurisdiction in a play for the startup’s assets.
In another instance, the founders of a Chinese cryptocurrency exchange alleged that police in the eastern city of Wuxi went beyond their jurisdiction to open a criminal probe against the startup, also over alleged use of illegal multilevel marketing techniques. Beijing has denounced the practice of aggressively seizing assets and assessing fines to raise revenue, describing such methods as “profit-seeking law enforcement." The long-running phenomenon has flared up again as China’s economy suffers through a sluggish recovery from the Covid-19 pandemic and a bursting of the country’s property bubble, prompting China’s top market regulator to
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