Welcome to Foreign Policy’s China Brief.
The highlights this week: The suspicious death of Hunan province’s finance chief sparks speculation in China and beyond, a Japanese student is killed in a knife attack in Shenzhen, and China’s central bank unveils a new stimulus plan.
Welcome to Foreign Policy’s China Brief.
The highlights this week: The suspicious death of Hunan province’s finance chief sparks speculation in China and beyond, a Japanese student is killed in a knife attack in Shenzhen, and China’s central bank unveils a new stimulus plan.
Sign up to receive China Brief in your inbox every Tuesday.
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A Mysterious Death in Hunan
The death of Liu Wenjie, the finance chief of Hunan province, in a fall last week has sparked a flurry of rumors in China. Liu’s body was found outside her apartment building in Changsha last Thursday morning. Police say she was killed and have named two men—who also fell to their deaths from the building—as suspects.
Liu, 58, had served as the head of Hunan’s Finance Department since 2022, but she spent a decade before that working on finance and statistics in the large province in China’s south. The case has captured the public imagination, even as censors work to delete rumors about it.
The official story is implausible, suggesting that Liu was thrown over the balcony of her apartment and that her attackers also accidentally fell to their death, one of them allegedly attempting to escape while sliding down a rope made of curtains knotted together. (Strangely, the police also said the attackers’ tools included nylon rope.) Home invasions are rare in China, especially in official residences under heavy surveillance like Liu’s.
People online have speculated that the two men were innocent bystanders or that they were involved but killed by police or co-conspirators. On Chinese and diaspora social media channels, others have claimed with little evidence that Liu was bound or interrogated, that she had personally guaranteed a 60 million yuan debt, and that other provincial leaders arrived quickly to the scene of her death.
So, what’s really going on here? Unlike in Russia, where defenestration is an occupational hazard for the politically connected, Chinese Communist Party (CCP) politics rarely involve direct assassinations. Instead, the power of the security services are often brought to bear against perceived enemies. Deaths in custody or under torture tend to be accidents, in part because there is a strong emphasis on forcing confessions from targets.
Liu’s official obituary provided scant details, but it made clear that she was in good standing with the CCP. Whatever she was caught up in, then, likely involved organized crime and probably borrowed money. That could mean involvement with the Hong Kong and Macao triad syndicates, which do a lot of cross-border debt enforcement. But big cities such as Changsha also have their own criminal syndicates.
As criminologist Federico Varese wrote in a definitive study of cross-border organized crime, gangs are deeply entangled with regular business and local CCP officials in China. Local and even provincial governments have turned to unconventional funding methods that are sometimes backed by organized crime—and where corruption blurs the boundaries between personal and official finance. Even regular debt enforcement in China can involve kidnapping and extortion.
The role of so-called black gangs—as China refers to organized crime—in local government is well-known and targeted by the central government. But in practice, crackdowns often involve swapping one criminal group for another. Last week, China announced a central supervision in Beijing to lead the “fight against organized crime and evil.” That may be badly needed as local governments see debts coming due—and not just from banks.
What We’re Following
Japanese student killed in Shenzhen. A 10-year-old Japanese boy died a day after being stabbed at an international school in Shenzhen, China, last week. The tragedy was followed by both government censorship of mourning and attempts to reassure Japan that it was an isolated case. That may not assuage the concerns of Japanese citizens and businesses in China, since the attack follows a similar assault on children at a school bus stop in June.
Japanese media have accused China of stirring up anti-Japanese nationalism, and a further drop in Japanese investment in China is likely. Although ultranationalism may play a role, knife attacks on children have followed a similar pattern as school shootings in the United States, with spate of incidents since 2010 that has killed more than 100 people. A man in his 40s was arrested in connection with the Shenzhen attack.
As with school shootings, social contagion seems to play a strong role in school knife attacks in China. The absence of guns makes them less lethal, but those responsible tend to target young children more often than their U.S. counterparts.
Taiwan arms sales prompt asset freeze. China announced last week that it would freeze the assets of nine U.S. military-linked firms inside its borders in response to U.S. arms sales to Taiwan—specifically, a $228 million sale of spare parts approved on Sept. 16. The move highlights one U.S. advantage: It’s unclear if the Pentagon-linked firms have assets in China or if the move is purely symbolic.
Although U.S. businesses can come under pressure from the Chinese government over their investments in the country, Beijing is a long way from controlling the choke points in global finance that Washington does, allowing the U.S. government to wield sanctions and freezes with genuine power.
Tech and Business
Central bank unveils stimulus. China’s central bank announced a wide stimulus package on Tuesday, leading to a small stock market rally. Chinese President Xi Jinping has been reluctant to attempt massive stimulus measures similar to those that kept China afloat after the 2008 financial crisis, but disappointing economic data this summer left China likely to miss this year’s 5 percent economic growth target without significant action.
The measures mostly focus on liquidity but also include mortgage rate cuts and reduced down payments in an attempt to revive the property market. That is unlikely to work: Although property prices continue to fall, they are still artificially propped up by local governments putting pressure on real estate firms not to sell below certain levels.
Officials fear social instability, since protesters tend to hold the government responsible when their investments fail. But with prices not allowed to hit bottom and real estate giants slowly unraveling, sales are still falling.
Economist disappears. Prominent Chinese economist Zhu Hengpeng was detained months ago for criticizing Xi’s policies in a private WeChat group, the Wall Street Journal reported on Tuesday. Zhu was the deputy director of the Institute of Economics at the Chinese Academy of Social Sciences (CASS), the country’s most prominent humanities institute, and a frequent commentator on economic issues.
This is a bad sign for a few reasons. First, it shows how insecure China’s leaders and especially Xi are that even technical, private criticism prompts this kind of overreaction from the security services. It goes without saying that disappearing someone—rather than the police just “inviting them for tea” to deliver a warning—is a serious step.
It also has a deep chilling effect on other experts, eroding the ability to object to bad government policy. According to the report, Zhu’s arrest was part of a wider purge of CASS led by a Xi loyalist. China has shed financial talent due to both purges and salary cuts under Xi’s “common prosperity” drive, leaving ideologues in prominent positions. That makes proper handling of China’s newly announced stimulus look unlikely.
FP’s Most Read This Week
A Bit of Culture
Han Yu (768-824) was a Tang scholar-official, poet, and essayist. This is the eighth poem in a set of 11 titled “Autumn Feelings.”—Brendan O’Kane
“Autumn Feelings – 8”By Han Yu
Whirling, whirling, falling leavesBlow on the wind past the balcony,Murmuring like whispering voicesAs they swirl and chase each other away.
In golden twilight, in my empty hall,I sit in silence, saying not a word.The servant boy comes in from outside,And sets the lamp he trimmed in front of me.
He asks me questions that I don’t answer;Brings me a meal that I don’t eat;Withdraws and sits by the western wall,And reads a poem aloud a few times through.
The poet was not a man of this age(A thousand autumns separate us)But something in his words touches meAnd makes the sorrow ache afresh.
I turn to the servant boy and tell him:Set down the book and go to bed.A man has times when he must think,And work to do that never ends.
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