It's not often I use this source, but this New York Times article has credibility in that the same tactic has been used by the Communist government in the former Soviet Union:
BEIJING — Local officials in Shandong Province have apparently found a cost-effective way to deal with gadflies, whistle-blowers and all manner of muckraking citizens who dare to challenge the authorities: dispatch them to the local psychiatric hospital.
In an investigative report published Monday by a state-owned newspaper, public security officials in the city of Xintai in Shandong Province were said to have been institutionalizing residents who persist in their personal campaigns to expose corruption or the unfair seizure of their property. Some people said they were committed for up to two years, and several of those interviewed said they were forcibly medicated.
The article, in The Beijing News, said most inmates were released after they agreed to give up their causes....
In a related story, Wang Wanxing was released after serving 13 years in a state-run mental asylum for "staging a brief demonstration on the anniversary of the 1989 crackdown on pro-democracy protesters in Tiananmen Square."