Dozens of Americans are barred from leaving China, adding to tensions

Just before Christmas 2017, he was stopped at the airport at the end of a business trip. Mr. Cai later learned somebody was trying to force him to pay an outstanding debt of several million dollars owed by a Beijing company where he was a director and shareholder.

He thought it was a misunderstanding and expected it to be sorted out quickly. And yet here he remains, stuck in China, the target of a form of Chinese justice known as an exit ban.

His is believed to be the longest-running case of such legal purgatory for an American businessman. Now 61 years old, Mr. Cai has wrangled with China’s judicial bureaucracy, tested the limits of U.S. diplomacy and depleted his savings.

In an interview with The Wall Street Journal he said he fears deteriorating U.S.-China relations—which are in the spotlight with the first meeting between President Biden and Chinese leader Xi Jinping as heads of state on Monday—have worsened his quandary.

The U.S. has accused China of using exit bans on Americans and other foreigners “without fair and transparent process under the law." Diplomats say Americans trapped in legal jeopardy abroad increasingly occupy their time.

Mr. Cai hasn’t been charged with a crime. Instead, court records outline a financial dispute between business partners that has included a police investigation. Mr. Cai said he is being squeezed to pay a debt that isn’t his.

Like other foreigners under exit ban, Mr. Cai can move around freely within China. Between his court dates and visits to the U.S. Embassy, he studies Chinese dynastic history and Western philosophers like Hegel from a spare bedroom in his 73-year-old brother’s Beijing apartment.

Videoconferencing keeps him connected to his wife in Laguna Hills, Calif., and their adult children, but he feels helpless in the face of their challenges.

Last year, Mr. Cai’s 23-year-old daughter Caroline fell seriously ill; she remains in treatment. His wife, Elaine, a mathematics tutor, has added students and taken on substitute-teaching opportunities. Their 27-year-old son Justin now shoulders payments on a line of credit taken out against the family home.

Not being there in a family crisis made Mr. Cai despair. “I thought my life was totally destroyed," he said.

Legal clash

The U.S. increasingly clashes with China over legal issues involving citizens that test the countries’ diametrically opposed judicial philosophies.

Legal experts say virtually any party to a civil dispute in China involving a foreign national can ask local police to add their opponent’s name to a national database of exit bans that police check at every airport, railway station and other border crossing.

Courts in the U.S. sometimes order foreign nationals to surrender their passports, primarily defendants in criminal cases, who have the right to appeal such an order. It is rare that a party in a U.S. civil case is blocked from traveling, legal experts say.

U.S. authorities say they don’t know how many Americans face exit bans in China, as targets of such bans often fear that involving diplomats could be viewed as provocative and deepen their predicament. An advocate for detainees in China, John Kamm, who chairs the San Francisco-based Dui Hua Foundation, estimates as many as 30 U.S. citizens are unable to leave China due to exit bans, on top of up to 200 detained in the country on what Dui Hua calls arbitrary grounds. Dui Hua said there is a legal basis for China’s exit bans but that their application is opaque and regulations are vague.

China’s Ministry of Foreign Affairs said it isn’t familiar with Mr. Cai’s case but said Chinese law fully protects the rights and interests of litigants in such situations. The Ministry of Public Security didn’t respond to a written request for comment.

A U.S. State Department spokesman said, “We are providing all appropriate consular services to Mr. Cai and are in close contact with him and his family as he seeks to return home to the United States."

“We frequently stress to China’s government—including at the highest levels—our concern about China’s use of exit bans on U.S. citizens without notification or transparent means to resolve them," he added.

East to West

Mr. Cai grew up in relative privilege in Beijing. He earned a degree in aerospace engineering and briefly taught at the Beijing University of Aeronautics and Astronautics, but in 1988 followed his wife, also born in China, to California, where she was pursuing a master’s degree in aerospace material science.

The following year, Beijing cracked down on pro-democracy students in Tiananmen Square. The couple decided to remain in the U.S. They became citizens and adopted Western names.

Around a decade ago, Mr. Cai invested in a company owned by one of his former students, a Beijing maker of printed circuit boards for automobile dashboards, Kaidisi Science and Technology Co., on hopes he would potentially profit big in an initial public offering.

In late 2015, the company, known as KDS, borrowed money to help it get over what it thought would be a temporary hump. Mr. Cai, who public records show has a roughly 8% stake in the company, said he verbally agreed along with other insiders to use his shares as a guarantee of repayment until longer-term bank-credit lines kicked in.

It didn’t go as planned: Cash-flow and other problems worsened and KDS halted manufacturing. Banks withdrew and the founder became increasingly hard to reach, Mr. Cai said. In 2017, Mr. Cai entered China five times, largely to deal with the situation at KDS.

After he was stopped at the airport that December, Mr. Cai engaged a lawyer and began searching courthouses in Beijing for lawsuits against him. He found two linked to KDS’s debt, including one in which the court had issued an exit ban.

“The foreign national is prohibited from exiting China as decided by a People’s Court for involvement in a pending civil case," said a one-page notice.

Mr. Cai said he had confidence his exit ban might be lifted in 2018 when then-President Donald Trump met Mr. Xi, the Chinese leader, in Argentina. Such hopes were dashed when Canadian officials, at the U.S.’s request, detained Meng Wanzhou, the chief financial officer of China’s Huawei Technologies Co. Days later, Canadians Michael Spavor and Michael Kovrig were jailed in China.

The arrests marked a turning point in the Sino-U.S. relationship. Mr. Cai would have to wait.

Prisoner swap

A resurgence of what the U.S. has called hostage diplomacy—by China, but also Russia, Iran, Venezuela, North Korea and Turkey—has reached such proportions that Mr. Biden in a July executive order declared it a national emergency. The order promised “tangible consequences" including sanctions on anyone involved in wrongfully detaining Americans abroad.

Speaking by phone with Mr. Xi the following week, Mr. Biden requested that he take steps to lift exit bans on Americans stuck in China.

By then, exit bans had become enmeshed in a broader tit-for-tat, in which both governments accused each other of using legal maneuvers to target the other’s citizens for political goals.

Under a delicate prisoner swap last year, the Chinese executive held in Canada, Ms. Meng, was permitted to return home after spending three years fighting U.S. efforts to have her extradited. Simultaneously, China released the two jailed Canadians.

In a breakthrough negotiated alongside that deal, China lifted exit bans on American siblings Victor Liu and Cynthia Liu. The two, who had faced no allegations of wrongdoing, had said publicly that China’s government was blocking their departure in hopes of encouraging their long-estranged father, a former Chinese government official who has never commented publicly, to return to China and face corruption charges.

A Chinese Foreign Ministry spokeswoman at the time said the police lifted restrictions on the siblings “in light of progress in an investigation into their parents’ cases." She defended exit bans as an “independent judicial procedure." The Lius’ lawyer declined to comment. Their mother remains jailed in China.

Following those developments, a bipartisan group of 15 U.S. senators and members of Congress last November urged Mr. Biden to give priority to the release of Kai Li, a U.S. citizen serving a 10-year prison sentence in China since 2016 on what his family and U.S. officials call trumped-up charges of espionage and theft of state secrets. Mr. Li remains in prison in China.

The State Department publicly warned of the exit-ban risk in January 2019, citing a rising threat Americans visiting China might not be permitted to leave. The travel advisory, which remains in force, said U.S. citizens of Chinese heritage may face additional scrutiny or harassment.

Mr. Cai now refers to himself as a “bargaining chip" in U.S.-China relations. Yet, outside of a handful of American diplomats and politicians, few know about his circumstances.

In their Laguna Hills neighborhood, Mr. Cai used to walk the family beagle, Lucky. Initially, when neighbors asked about his absence, his wife told them he was traveling in China. More recently, she has tried to explain the truth, which she said has merely puzzled them. Lucky died in September.

A series of exit bans

Some of the money KDS borrowed in 2015 came from an investment firm linked to one of its directors, who had previously worked as a Chinese securities regulator. Mr. Cai said he had recruited this person to invest in the circuit-board maker in hopes he could help it go public.

Mr. Cai’s signature appears on key documents presented in court related to KDS’s debt, but he said it was fraudulently appended. Battling through four levels of court, Mr. Cai has generally lost the argument that he doesn’t have an obligation associated with KDS’s debt.

The exit ban that blocked his late 2017 effort to leave China expired in early 2019 and a second one was withdrawn later that year. A few days later, Mr. Cai tried to catch a flight to Los Angeles.

At passport control, police surrounded him. There was a third exit ban, this time due to a criminal proceeding involving KDS.

Mr. Cai said he was instructed to report to a police station in northern Beijing for questioning. An officer there told Mr. Cai that he was a suspect in a fraud investigation and that cases like his could drag on for 10 years.

“[The] United States cannot protect you," Mr. Cai recalled being told, according to a memo he sent to the embassy. Mr. Cai said he hasn’t heard much more about the investigation, though an associated exit ban remains in effect.

In 2020, Mr. Cai was hit with a fourth exit ban in connection with another civil case tied to KDS’s debt. It also remains in effect.

Court filings show the plaintiff in that case, another KDS creditor, has argued vigorously for Mr. Cai to be blocked from leaving China until the debt, which with interest and penalties now amounts to around $10 million, is repaid.

Neither of the creditors provided comment for this article.

Mr. Cai’s most difficult moment came when his daughter got sick. Months after graduating from the University of Southern California, Caroline landed in a hospital with a rare type of anemia. Doctors determined she needed an emergency bone-marrow transplant to save her life. After her father was identified as a potential donor, the U.S. Embassy helped the family request that Chinese authorities grant Mr. Cai an emergency medical release.

It went nowhere, and Caroline wrote a letter: “My dying wish is to have my father at my side." Mr. Cai also appealed to a court, where a judge expressed sympathy but deferred to a lawyer for the plaintiff, who accused Mr. Cai of grandstanding by using the U.S. Embassy “to show off in front of the Chinese people," according to a transcript.

The immediate crisis passed when immunotherapy improved Caroline’s condition. Still, Mr. Cai began to cry as he recalled the stress of those days. “I would like the whole world to know what happened," he said.

—Rachel Liang and Liyan Qi contributed to this article.