HONG KONG • Where is billionaire Xiao Jianhua?

That depends on whom you ask, and the answer may further inflame Hong Kongers worried that China is increasingly meddling in the city's affairs.

A source close to the missing billionaire told the South China Morning Post that the tycoon is currently in mainland China.

The source, who declined to be named because of the sensitivity of the matter, said the 46-year-old could communicate only with his family.

"His family members can communicate with him. That's not bad; at least we know he is safe and well."

The latest information about Mr Xiao contradicted an advertisement in his name that appeared on the front page of local Chinese newspaper Ming Pao yesterday morning.

The ad, which first appeared on Ming Pao's website on Tuesday, said he was "recuperating abroad" and had not been "abducted".

"The Chinese government is a civilised government ruling according to law," the ad said.

"Everyone don't misinterpret. There's no such thing as me being abducted back to mainland China."

The Canadian citizen also said in the ad that he is protected by both that nation's embassy and by Hong Kong law because he is a permanent resident of the city.

A subordinate in contact with him daily told Bloomberg the 46-year-old tycoon, who runs Tomorrow Holdings, remained outside China as of yesterday.

Earlier this week, Mr Xiao's Tomorrow group responded with two statements in his name via its WeChat account, rejecting claims he had been abducted back to the mainland.

The two statements - along with the rest of the group's posts - were later removed from the account.

The New York Times also reported that Mr Xiao was taken by Chinese police to the mainland, where he was in custody.

The paper, which did not say why he was detained, cited a person close to the businessman whom it did not identify.

Hong Kong-based analyst Willy Lam said Mr Xiao may have been targeted because he knew "potentially embarrassing details" about financial actions involving major Chinese political clans.

The South China Morning Post reported that Mr Xiao left the luxury Four Seasons hotel on Friday accompanied by a group of unknown people. He then crossed into mainland China, where he remains, the paper reported yesterday, citing sources it did not identify.

When asked about Mr Xiao, the Hong Kong police said "the subject" entered China on Jan 27 but did not explain.

A police source briefed on the investigation said the case was initially treated as a "kidnapping" following a complaint from someone connected to Mr Xiao. But after a review of CCTV footage at the Four Seasons and at the border checkpoint, police concluded that he had voluntarily left Hong Kong.

The possibility that police from mainland China seized Mr Xiao and took him back across the border is a politically sensitive issue in Hong Kong, which is part of China but has a separate legal system.

Hong Kong's Basic Law - the mini-Constitution drawn up in consultation with the British before the 1997 return to China - prohibits Chinese law enforcement authorities from operating independently in the city.

Yet last year, five men - including British and Swedish nationals - who sold books critical of China's Communist Party went missing and later turned up with the authorities on the mainland.

"This is a real concern," Mr Kevin Yam, a spokesman for the Hong Kong-based Progressive Lawyers Group, said yesterday.

"You have people entitled to be in Hong Kong who are being nabbed across the border. It goes right to the heart of 'one country, two systems'."

In 2014, thousands of protesters occupied areas of the city because of what they considered Beijing's increasing control over Hong Kong politics.

The Hong Kong government said yesterday that the police were investigating the case, and expected the Basic Law to be followed.

The government "will not allow non-Hong Kong law enforcement officers to take law enforcement actions in Hong Kong", according to the statement.

BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE