China’s Law Enforcement Overhaul Takes Aim at Private Sector Shakedowns

[para. 1] For years, Chinese entrepreneurs have faced significant risks due to “long-arm jurisdiction,” where disputes in one part of the country could result in law enforcement actions, such as account freezes and asset seizures, initiated by authorities from distant provinces. These actions, often motivated by the financial interests of local authorities, have created widespread anxiety and unpredictability within China’s private sector, hampering investment and business operations.

[para. 2] In response, Beijing is making its most decisive move yet to curb these practices with a new comprehensive, long-term mechanism as part of the upcoming 15th Five-Year Plan (2026-2030). According to official supplementary materials, this initiative aims to standardize law enforcement regarding businesses by addressing enduring issues like profit-driven enforcement and arbitrary asset seizures. The central government’s explicit goal is to restore confidence among entrepreneurs, recognizing the private sector as critical for national economic growth and innovation.

[para. 3] This move follows a nationwide campaign in 2025 that highlighted the persistence and complexity of these problems. The central authorities now seek a systemic solution that creates a fairer, more predictable, market-oriented, and internationalized business environment. This directly addresses longstanding concerns that have deterred domestic and foreign investment in China’s dynamic private sector.

[para. 4] The effort builds on the landmark Private Economy Promotion Law, which took effect on May 20. This law formally protects the personal, property, and personality rights of private business organizations and their operators. Now, the mechanism outlined in the 15th Plan sets out a strategic program to fundamentally alter the relationship between the law and private enterprise.

[para. 5] A critical target is the elimination of profit-driven law enforcement. Local governments, facing financial stress, have sometimes used their enforcement powers to collect revenue by targeting companies—even those located far beyond their jurisdiction, a phenomenon dubbed “offshore fishing.” The new approach rejects such practices and threatens severe consequences for overstepping boundaries.

[para. 6] To dismantle this system, Beijing is calling for a more rigorous review of normative documents—local rules and directives—and clearer regulations on administrative enforcement. These measures will define the specific authority, processes, and oversight responsibilities of supervisory bodies, anchoring the entire system more firmly in law.

[para. 7] The initiative will also create a hybrid approach of routine supervision and targeted inspections, underpinned by an advanced national administrative enforcement information platform for real-time monitoring. Additionally, businesses affected by enforcement actions will benefit from mechanisms to assess the economic and social impacts of those actions.

[para. 8] Post-action legal remedies are being reinforced. The guidelines emphasize expanding avenues for administrative litigation and administrative reconsideration, which allow businesses to contest unfair enforcement actions through higher authorities. The aim is to establish reliable channels for resolving disputes and overturning wrongful decisions.

[para. 9] The centerpiece for many entrepreneurs is the campaign against the arbitrary seizure, freezing, and confiscation of business assets—practices that can cripple a company regardless of eventual innocence. Many consider such asset seizures to be a major obstacle to long-term business confidence and investment.

[para. 10][para. 11] Specifically, the guidelines demand stronger judicial review of coercive measures such as asset freezes and confiscations, making asset investigations a separate, challengeable phase of trials. They also reinforce the principle that all confiscated assets and fines should enter the public treasury, not law enforcement budgets—breaking the link between enforcement and financial incentives, and supporting legal, standardized asset-handling procedures.

[para. 12] Experts suggest that public correction of wrongful convictions and accountability for mistakes would help restore trust. The guidelines echo this by calling for systematic mechanisms to prevent, identify, and correct wrongful convictions involving businesses, as well as clear reporting and complaint channels.

[para. 13] Demonstrating practical commitment, on November 5, the Supreme People’s Court publicized four notable retrial cases, three involving the exoneration of entrepreneurs, illustrating new protections for private businesses.

[para. 14] The guidelines stress further enhancing officials’ legal awareness, training them to follow the law, and intensifying supervision and oversight of official conduct in line with legal standards.