Public pressure is part of the strategy to get borrowers to pay up. Chinese officials have ordered provincial governments to set up online platforms to highlight defaulters. A court in Beijing recently asked an internet security company to tag irresponsible borrowers’ telephone numbers so that when someone called, a message would appear onscreen saying that the respondent owed money.
Chinese regulators have also ramped up scrutiny on conglomerates that have gorged on inexpensive debt to finance pricey overseas acquisitions. Pressure from the government has already curbed deal making by the country’s “gray rhino” companies, a term used by the official newspaper of the Communist Party to describe the businesses as large and visible problems that are ignored until they become a threat.
The Supreme People’s Court’s database, established in 2013, includes the names of defaulters who have been sued and lost. The court announced in June that it had cataloged more than seven million defaults. People on the list have been blocked from buying airline and high-speed rail tickets, and have been rejected for bank loans and credit cards.
According to the court, the database is meant to help the development of China’s “social credit system,” a government project that aims to eventually give each citizen a score based on spending habits, loan repayment and good behavior in public.
Mr. Jia’s fall from grace is a cautionary tale about China’s fast-moving tech world, where firms can soar and fall at the same dizzying speed. This summer, Mr. Jia resigned from all his positions at Leshi Internet, LeEco’s publicly traded arm, after a court in Shanghai froze $182 million in assets tied to him.
According to the Supreme People’s Court website, a Beijing court in November also barred Mr. Jia from making large purchases.
Citing Chinese laws, the court order says Mr. Jia cannot engage in “high spending” or any spending “not necessary for living and working.” The relevant law elaborates further, stating that people whose spending is restricted cannot travel first-class on planes or trains, spend at expensive hotels or golf courses, buy or build luxurious houses, purchase cars that are not necessary for business operations, travel for leisure or pay for their children to study at private schools.
Hu Wenyou, a partner at Yingke, a Beijing law firm, said the top court’s database is generally effective at getting defaulters to cough up — but only if they are in China. In a recent interview with a Chinese news site, Mr. Jia said he was living in California and focusing on Faraday Future, a financially troubled electric-car start-up of which he is the largest shareholder.
“In China, everything is monitored,” Mr. Hu said. “You have to use your ID card and passport when you buy a plane ticket and go through customs. You can’t avoid it.”
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