A much less pleasant dimension of increased prosperity and economic freedom is the rise in fraudulent businesses and investment scams. China is full of both, some—such as the tinkering with baby formula—making worldwide headlines. Less well known are the actual numbers. For example, in 2014, financial scams conned people out of $24 billion, while more recently police arrested 21 people involved in a Ponzi scheme centered on Ezubao, the country’s largest online financing platform, that netted them $7 billion.
Areas of fraud are widespread, including online marketing, metal works, agricultural products, streetcar systems, and more, usually with impressively documented assets that do not exist in actual fact. Rob Schmitz describes the situation vividly in his book, Street of Eternal Happiness. Friends with Auntie Fu, the wife of a pensioner who sells scallion pancakes out of his street-level window at 50 cents a pop, he does his best to dissuade her from investing in questionable schemes. These involve a mushroom farm in the northeast without any mushrooms, a mall-centered sales scheme focusing on special-app terminals, and others of similar ilk. Dead set on making a killer in the market, deluded by entirely fictional profit figures—especially in contrast to the interest rates offered by banks—and impressed by the claim that the companies are listed on Western stock exchanges, Auntie Fu remains undeterred and loses $50,000 of her hard-earned pension.
Many Chinese are in the same boat, as protests in various places document, but they are not alone. Over seventy Chinese companies, listed at the New York Stock Exchange, were found fraudulent and banned, but only after numerous Americans made substantial investments in them.
Daoism, too, is not exempt from this trend, as the well-publicized case of Li Yi 李一(b. 1969) documents, the one “not of the constant way,” as the headline puts it. An initiated Daoist master, Li Yi served as abbot of the Shaolong guan 绍龙观 (Summoning Dragons Temple), located in the Jinyun shan 缙云山nature preserve near the mega-city of Chongqing in southwest China. Claiming to have started Daoist practice at age 3 and attained academic recognition by major universities—both entirely fictional—he styled himself a living god in possession of supernatural healing powers. To prove these, he regularly faked miracles and soon attracted over 60,000 followers, including some well-known pop stars and internet giants like Jack Ma. In the process, he made himself rich by charging thousands of dollars for spa treatments and courses in magical powers.
Coming to the attention of the authorities, the Bureau of Religious Affairs started an investigation into his claims and practices in 2010, leading to a formal trial and sentencing to several years in prison. The case has highlighted the potential dangers of miracle healers and thrown a rather unfavorably light on the Daoist Association, which allowed him not only to practice unchallenged but also to rise to the status of abbot within its ranks.
Read: Schmitz, Rob. 2016. Street of Eternal Happiness: Big City Dreams along a Shanghai Road. New York: Crown Publishers, chs. 9, 11.