China Capitulation Part 5 – The Chinese Titanic has hit the iceberg

Have you heard about the Chinese pig-butchering scams that operate in South East Asia? The stories about them are disturbing and scary.

No, it’s not about killing pigs in abattoirs. That’s a proverbial term. Let me tell you what they are.

You may have received countless spam calls and text messages on your phone. They may be job offers, promises on finding love, or a get-rich quick scheme. If you answered their call, they may engage in small talk before they cut to the chase. The objective is invariably to get you to share your personal details with them, or to take up on an attractive offer.

Most of you would know these are scammers. What many may not realise is that they may be part of a major syndicate operating out of South East Asia. They are often Chinese people, though some are from other countries, even westerners. They fell victim to a scam, lured by a prospect of a better future.

They thought they were starting a bright future in Burma, Cambodia, Laos, or Thailand. A job offer came with promises of high pay, accommodation, and a plane ticket. A promise of finding romance in a foreign country. Either way, they fly over, land at the airport and someone receives them there.

Along the way, their hosts take them to a secluded location, confiscate their documents, put them in chains, and then set them to work. Their daily routine is to eat, sleep and use social media and mobile phones to defraud unsuspecting people of their funds. Schemes include overseas job opportunities, online dating, online gambling networks, wire transfers, etc.

They often work for more than 14 hours a day, deprived of their freedom, and work under high pressure. They may face severe punishment when they don’t meet their quotas. Light punishment (if I can even use that word) includes confinement and beatings. Persistent underachievers face mutilation, sexual torture, organ harvesting, and death.

According to the media, hundreds, even thousands, of people are holed up in these security compounds.

It is literally hell on earth…

A warning that came too late –
Eradication in progress

For some time in late-2024 and early-2025, the news cycle covered the horrors of these scams. Authorities warned people not to travel to South East Asia to avoid falling victim and ending up in one of these hellish compounds.

But what many didn’t know is that the news came quite late. I only recently delved further into it and realised that the warnings came after the fact. The crackdowns on these scam networks were well under way.

It began in late-October 2023. China intervened and worked with local insurgent forces against Burma’s military junta government in one region close to the China-Burma border. They raided and dismantled a major network in the Kokang region in north-east Burma.

Last September, the People’s Intermediate Court in Wenzhou, Zhejiang province, sentenced 11 members of the Ming family to death for their role in running these scam centres in Kokang. The Ming family was one of the four infamous families operating there. The other three families were the Bai family (the ringleader), the Liu family, and the Wei family.

The Bai family trials took place in Shenzhen, concluding last November with similar sentences pronounced. As of 29^th January this year, the Chinese authorities executed the 11 members of the Ming clan. Four members of the Bai clan met a similar fate five days later.

There have been other high profile crime bosses that were rounded up. These included The Prince Group’s Chairman, Chen Zhi, extradited from Cambodia, and She Zhijiang, extradited from Thailand. These arrests came as the Communist Party of China negotiated with the Cambodian and Thai governments to crack down on these syndicates. Previously, these crime bosses enjoyed not only legal protection from local authorities. They even served as government advisors and were allowed their own paramilitary forces.

It’s easy to think that this demonstrates how the Chinese ruling party is acting in the interest of its people. It is eradicating these harmful crime syndicates that seemed almost invincible.

But two inconvenient questions remain:

What took them so long?

And why the timing?

A system that thrives on dysfunction,
corruption, and abuse

Scam centres aren’t new, inside or outside of China. The Cultural Revolution utterly destroyed trust between people. This led to a mindset of self-preservation and finding security in wealth and power. There was no lower bound for moral standard in obtaining security. This led to people resorting to deception, violence, and corruption.

Moreover, the power structure in China is peculiar. While the Communist Party is centralised and dictates from Beijing, some regions gain autonomous powers to govern themselves. This is especially the case for minority ethnic groups. They may nominate their own leaders, set their rules, but answer to a provincial government.

Such a structure is conducive to crime. And that’s where scam centres can establish themselves. The local leaders collude to extract wealth and use their proceeds to bribe the provincial leaders to cover for them.

Occasionally these local leaders get out of control. Their wealth and power attract unwanted attention in Beijing, leading to investigations. Some decide to cast their lot and openly rebel. When defeated, these leaders face the firing squad or a long prison sentence.

In other words, it’s the Wild East. Power and wealth reigns, with the law acting as a code that governs the peasants and serfs.

Preserving image rather than
protecting the greater good

If you think that the latest government-driven crackdown on these scam networks is to help the Chinese people, think again.

I’ve written in previous weeks about how Chinese people care about reputation and image immensely. This is especially the case with the ruling party.

Image matters so much that the rulers, not just the current ones but going back through history, formulate policies that centre on perception. To hell with looking after the interests of the nation and its people! What matters is the dignity of the one at the top.

For this reason, many who grow up in the West find it puzzling when they study Chinese history and politics. That’s because they have a western mindset. One built on equality in dignity for everyone. It goes against the grain of Chinese thinking, where the ruler has a heavenly mandate and an elevated status. This comes with exceptional privilege, and impunity.

The latest crackdown on these criminal syndicates occurred because of a combination of domestic and international pressure. I’ve discussed in previous articles how President Xi is facing a crisis of confidence. He faces threats domestically from a declining economy driven by declining property prices, an ageing population, and a demoralised younger generation.

Outside, the Trump administration is exerting immense economic and military pressure, manufacturing is leaving China for other countries, and Japan’s changing policies aim to offset China’s dominance in Asia.

Party unity is of paramount importance under such dire situations. President Xi took power in 2013 and set about cracking down on corruption. That was of course a cover for consolidating power. He largely achieved that when he was able to secure a third term, which is meant to be a lifelong appointment.

However, living like an emperor has its risks. Those around him who propped him up can also topple him. They also have their own power bases, often with dark and shady ties.

The weakening Chinese economy disenfranchised many, especially the younger generation. Some resorted to crime, joining gangs to make a quick buck. Others who seek to play the game right might have to look for lucrative job opportunities overseas.

Do you see what I’m getting at now?

The crime syndicates running inside and outside of China have ensnared Chinese people as a result of the longstanding dysfunction of the system. They grew because of circumstances that enabled them.

The Chinese people have endured these scams for a long time. They voice their concerns, but the government shrugged because many officials benefit from them. But when the US and other nations felt the negative impact of these syndicates, China had to act. They have a reputation to try and preserve.

More scam compounds will fall. Their ringleaders will be arrested and face ‘justice’. This will further reveal the banality of the Chinese ruling party.

The Middle Kingdom will continue to hum along for a while longer. The world will continue to rely on China’s manufacturing and voracious appetite for resources until it has set up an alternative.

The Chinese Titanic has hit the iceberg, but there are enough chambers to keep it afloat for some time.

As the global system shifts, Australia may be a hotbed for other countries to bid for our vast resources.

You can learn more about how to prepare for this change by clicking on this latest presentation.

That’s it from me for this week. Next week, I’ll explore how a grisly murder of a Hong Kong socialite three years ago and the trial proceeding now may uncover a vast cross-border corruption scheme.

Stay tuned.