Why are so many Chinese bosses disappearing?

Mechanism and Scope of "Liu Zhi" Detentions

• The "Liu Zhi" system is an extra-judicial detention method created to facilitate corruption investigations, allowing the anti-corruption agency to bypass courts and legal oversight.
• Detainees are denied access to lawyers, and agencies do not require court approval to initiate detention.
• Individuals can be held for up to eight months per cycle, with detention clocks resettable upon renewal.
• The system operates under harsh conditions: cells lack windows or clocks, are supervised 24/7, and maintain continuous lighting.
• Originally targeted primarily at Communist Party members and government officials, the scope has expanded to include private sector business leaders.
• There is no official public registry of specific individuals detained; data is derived from mandatory announcements by listed companies regarding the disappearance of CEOs or chairmen.
• At least 39 business people have been recorded as disappearing into Liu Zhi between January and September 2024, marking an increase over the previous year's record numbers.

Escalation of Anti-Corruption Activity

• Anti-corruption investigations are on track to reach a record one million cases by the end of 2024, up from previous years.
• Detentions are frequently triggered by investigations into high-ranking officials, dragging their associated business networks into probes due to perceived tangential connections.
• Local governments, facing severe fiscal shortages, are increasingly deploying "deep sea fishing" campaigns where anti-corruption divisions cross administrative borders to detain businessmen in other jurisdictions.
• In these cross-border probes, assets are seized from detained individuals upon the potential revelation of wrongdoing.
• Historical enforcement data shows approximately 60,000 pharmaceutical industry figures and 17,000 finance sector figures were punished by the agency last year.
• Punishments vary from warnings to police referral, though exact outcomes for those not placed in Liu Zhi remain unquantified.

Economic Impact and Social Consequences

• Business sentiment is being severely degraded by the combination of economic struggles, Liu Zhi probes, and the expansion of credit blacklists.
• Approximately 200,000 individuals were added to credit blacklists this year, restricting their ability to use high-speed rail and commercial flights.
• Five high-profile suicides by businessmen have occurred this year, with public discourse attributing these deaths to intense pressure from economic instability and corruption investigations.
• The Communist Party is actively attempting to signal support for the private sector, yet current indicators suggest sentiment remains low with little immediate expectation of improvement.