LIU QIBING became the most famous copper trader in the world late last year when his wrong-way bets left his Government with an estimated bill of $300 million (£160 million). He has not been seen since.

Mr Liu, who was employed by the Chinese State Regulation Centre of Supplies Reserve, short-sold between 150,000 and 200,000 tonnes of copper on the basis that the price would fall. Instead, world copper prices went on to hit successive highs.

His disappearance is evidence of the Chinese Communist Party’s ability to operate outside, and even above, the law.

He is being held under an internal party rule known as “shuanggui”, or double regulation. This gives the party’s anti-corruption watchdog, the Central Commission for Discipline Inspection, the right to require suspects to report to the inspectors at a designated time and place.

The rule was introduced in 1990, soon after the student-led Tiananmen Square protests, which were triggered in part by public anger at the spread of corruption. In practice, it amounts to house arrest.

Party members suspected of corruption can be taken to a “safe location”, often a government guesthouse where they are questioned, placed under 24-hour watch and denied any contact with the outside world.

Legal experts have voiced concern about the rule, arguing that the system is illegal and unconstitutional and has been abused to detain people who are not party members.

People could be held incommunicado for months, if not years, waiting for their case to be handed over to the legal authorities.

Last May, the party approved changes to curb abuses of the system. The document contains three main revisions: suspects cannot be held for more than three months; only officials above county level may be detained, and suspects are allowed to call family members.

But, in line with the secretive workings of the party, the document’s details were not relayed to provincial discipline inspectors until January this year and to city officials a month later.

Mr Liu was taken in for questioning in October last year — well after the new time restrictions were imposed.

However, sources close to his case said that party officials were reluctant to release him and nervous to press legal charges because of the possible implications for other government officials. This has left Mr Liu in a legal limbo.

Supporters of the double regulation system argue that the party should have the right to discipline unruly members under its own code of rules.

Feng Jing, a Beijing lawyer, said: “This is a strong deterrent. While it is against the spirit of the law, it is appropriate for the system in China.”

But it is not clear how well it acts as a deterrent. In 2005, prosecutors investigated 41,449 government employees on suspicion of corruption and dereliction of duty, and took 30,205 of them to court.

Times Recommends

• Fish and chip shops ‘selling cobbler as cod’
• T in the Park festival at Kinross
• Body Watch