How Profit-Driven Law Enforcement Can Kill Businesses (AI Translation)

【周刊提前读】深度：如何从制度着手治理趋利性执法？

The recent rise in profit-driven law enforcement in China, particularly characterized by cross-regional enforcement actions, has cast a spotlight on potentially problematic practices as China grapples with an economic slow-down. Key measures to address these concerns were discussed on December 16, 2024, at a thematic study session led by Premier Li Qiang. The focus was on improving administrative law enforcement by standardizing discretionary powers, optimizing procedures, and strengthening accountability to enhance efficiency. This move aims to optimize the business environment and prevent negative practices like excessive fines and cross-regional enforcement from undermining private enterprises and social stability [para. 1][para. 2][para. 3].

Profit-driven enforcement, colloquially known as "deep-sea fishing," refers to law enforcement tactics that prioritize revenue collection through fines and asset confiscation. This practice undermines the business confidence of private enterprises and local economies. At its core, the issue arises from the financial incentive to use criminal procedures to resolve civil disputes, driven by the revenue generated from fines and confiscations. Scholars note that rising internet crime has disrupted traditional jurisdictional practices, contributing to this phenomenon [para. 4][para. 5].

Detailing an example, a case from Zhejiang Province in November 2024 exposed enforcement practices driven by illicit gains. Two officers from outside Zhejiang attempted to extort business owners using their official capacities. When apprehended, jurisdictional complexities delayed effective legal action due to their status as judicial personnel. This incident highlights systemic flaws in jurisdiction and accountability [para. 6][para. 7].

Zhejiang authorities have since embarked on reforms to counter such exploitation and enhance fair business practices, which resulted in positive outcomes, such as unfreezing significant business assets [para. 8][para. 9]. However, Guangdong's experiences show that the problem extends beyond Zhejiang, with numerous instances of profit-motivated enforcement against local enterprises by agencies from other regions [para. 10].

Senior policymakers, including Premier Li Qiang, have reiterated the necessity of aligning law enforcement practices with economic policy goals to curtail this trend. Consensus has been reached that discretionary power and regulatory measures need stricter control to safeguard businesses from exploitative enforcement actions. These efforts are in tandem with proposed regulatory changes targeting the rationalization of cross-regional enforcement practices and the handling of economic matters as civil rather than criminal issues [para. 11][para. 12][para. 13].

The handling of fines and confiscated assets remains central to the debate. Although legal reforms since 1982 have aimed to separate enforcement revenues from expenditures, fiscal and judicial practices have struggled to break free from profits linked to enforcement actions. Fines and confiscations have become a revenue stream for local governments, exacerbating profit-driven enforcement at local and jurisdictional levels [para. 14][para. 15][para. 16].

Experts advocate for several strategic changes, including funneling all enforcement revenue to the central treasury and creating a robust mechanism for fiscal transfers to handle case-related expenses. They advise that systemic alignment of such a policy with overarching judicial reforms for centralized management could be key to breaking the profit-driven cycle [para. 17][para. 18].

Furthermore, rapid advancements in technology and jurisdictional challenges in handling internet-related crimes call for revisiting jurisdictional laws and enforcement protocols, ensuring they are attuned to contemporary realities [para. 19][para. 20][para. 21]. Establishment of specialist cross-regional enforcement bodies has been proposed to manage complex, large-scale internet and financial crimes, reducing the need for local enforcement to extend beyond reasonable jurisdictional boundaries [para. 22][para. 23][para. 24].

Critics suggest that profit-driven enforcement compromises justice and negatively affects businesses' operational health. The absence of clear regulations on managing case-related assets leads to excessive freezing of business accounts, impacting credit and operations [para. 25][para. 26]. Recommendations include developing clear legal procedures for asset management to prevent exploitation and ensure continuity of business operations during investigations [para. 27][para. 28][para. 29].

To address the multifaceted challenges posed by profit-driven enforcement, comprehensive reforms focused on establishing transparent, equity-driven judicial and fiscal systems are necessary. These reforms should prioritize protecting business interests and deterring enforcement practices fueled by financial incentives, aligning with broader economic objectives and maintaining social justice [para. 30][para. 31][para. 32].