Hostage Taking Is China’s Small-Claims Court

When dozens of men stormed the Shanghai branch of USGFX, an Australian foreign currency trading firm, in July, the employees were terrified. Held hostage as assailants sealed the exits, the 20 employees — all Chinese — had their phones seized and only got food and water after they begged for sustenance. While 17 of the staff were freed within 24 hours, the remaining three were held for five days.

But despite the hostage drama, there were no SWAT vans at the premises, nor did local media show any interest. The company tried in vain to get the police involved, with initial reports suggesting that up until the day the situation was resolved, the police presence was limited to a visit by a few — possibly just one — officers from the local economic crimes unit.

In China, where it’s utterly unremarkable for one side to take hostages when financial disputes crop up, the story was no more interesting than a civil lawsuit. Given how reticent the authorities are to intervene, taking hostages is frequently seen as a better route than appealing to the courts. In fact, the courts are sympathetic to certain types of hostage taking: When debt is involved, the law considers it a lesser offense than taking hostages for ransom, and it is classed as “unlawful detention” instead. In practice, police often don’t even consider it to be an offense at all.

In 2010, one government hospital even refused to hand over a newborn baby to his parents so they would pay up for the birth costs. The baby was kept in the hospital for more than three months.

“Virtually all of the time, the police studiously seek to avoid getting involved,” said Dan Harris, a high-profile lawyer who specializes in Chinese law. “They see their job as maintaining social harmony.”

“The most common reason, by far, for someone to get taken hostage is when their company allegedly owes money to a Chinese company. They are typically resolved by the foreign company paying every dollar allegedly owed,” he said. “I am not aware of any instance in which there has been a compromise. Sometimes, though, when a company pays enough, we can line up a team and free the hostage.”

It makes a lot of sense for Chinese police to avoid getting involved in financial disputes, even when hostages are taken. One side of the dispute might be connected with a local government office or powerful business. Even if they’re not particularly powerful, they could launch protests, and the police might be blamed. It’s also fairly cheap and easy for one side to hire thugs, who may be better prepared for a fight than the police.

But the police are also predisposed to see it as none of their business. Public security is broken into two areas: minshi and xingshi. Translated loosely, they can be considered civil and criminal issues, respectively. When it’s a financial dispute, rather than a hostage taken for ransom, police generally consider it more of a minshi issue and thus more in need of mediation than law enforcement, if it requires any police input at all. Debt kidnappings aren’t the only situation this applies to: Even in fights with quite serious injuries, the police often attempt to negotiate a payoff to the injured party instead of bringing charges.

The theme of the wise official mediating among disputants has long been a staple of Chinese literature. In the modern context, the strangeness of the police’s dual role as social mediators and law enforcers has been noted by Fordham University professor Carl Minzner. Minzner attributes it to the authoritarian system’s top-down approach to dealing with tensions between citizens and the state and to the Chinese Communist Party’s refusal to allow the development of independent legal bodies that could deal with such disputes.

Harris’s China Law Blog repeatedly stresses the risks of being taken hostage in China over debts. In many cases, the best move for foreigners facing such circumstances is simply to get out of the country before the thugs reach you.

Often, precious little can be done to protect alleged debtors from thugs, and the courts and the police are of little help. This helplessness was on full display when two Indian businessmen were taken hostage for 20 days in the Chinese trading hub of Yiwu in 2012. The case came to a head when a court ordered that the two businessmen — who had been taken to court by the angry locals who had seized them — be released. The enraged mob proceeded to ignore the ruling. Authorities later managed to spirit the two men to Shanghai while the case was processed.

The case, of course, stirred up alarm in India — not least because an Indian diplomat sent to try to resolve the situation became caught in a violent fracas and was subsequently hospitalized. But Chinese authorities were, and still are, ill-equipped to understand the foreign perspective on these cases. Nationalistic Chinese tabloid the Global Times was oblivious to the root cause of Indians’ distress and was instead content to chalk it up to nationalism. The editors couldn’t grasp that most countries don’t see kidnapping as a legitimate response to debt.

As for the people who decide to take hostages, there are a pretty clear set of incentives — sometimes it works. In 2015, when investors around the country were left high and dry by Fanya Metal Exchange — a fraudulent government-backed trading scheme that was even advertised by staff of top banks — they formed a mob and grabbed the CEO, Shan Jiuliang, themselves, delivering him to police custody. In that instance, he was not arrested, but investor representatives managed to extract promises from him regarding their investments.

There are, of course, limits to taking hostages without a police backlash. If those taking the hostages are wielding weapons or take innocent bystanders captive, they are far more likely to draw attention from the police. In 2015, a desperate Gansu man leapt in a car in Nanchang, Jiangxi province, and took the driver hostage with a knife and commanded the driver to take him to the police. He was angry because his boss owed him money, but lacking any clues as to the whereabouts of said boss, he grabbed a random driver instead. He ordered the driver to call the police but ended up arrested himself and spent six months in prison.

The lack of police involvement in these debt-hostage situations, coupled with the economic downturn, makes China a ripe environment for loan sharks. One case that occupied headlines this year involved a debt collector who hired a gang of thugs to terrorize a 23-year-old man named Yu Huan and his mother to get a debt repaid. The police did not intervene, and Yu ended up grabbing a knife and killing one of the attackers after they pushed his mother’s head into the toilet.

Yu was initially sentenced to a life sentence, though this was reduced to just five years after a public outcry. The Southern Weekly newspaper suggested at the time that the death had only occurred after police had left the scene of the scuffle, leaving Yu desperate. Yu’s attorney indicated during the proceedings that they were considering suing the police for dereliction of duty.

This, it would seem, was finally enough to spur police action.

The authorities examined the case and exonerated all the police involved, saying they had only left to call for backup.

Photo credit: FREDERIC J. BROWN/AFP/Getty Images