Money Laundering Challenges China's Economy

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Last updated at: (Beijing Time) Tuesday, July 09, 2002

Money Laundering Challenges China's Economy

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An anti-money laundering system is lately reported being instituted by the People's Bank of China (PBC). Money laundering, as things are now in the country, can by no means be totally wiped out or disappear of its own accord in a short time.

A full range of coordinated fights is therefore needed to combat money laundering and helped with efforts from various quarters including the PBC, finance, tariff, custom, foreign exchange, diplomacy, justice and others. This is especially so of the time rife with money laundering across the world.

By estimation, money laundering in today's world must be up to US$600bn at least, a figure about 2 - 5 percent of the world GDP.

Rampant money laundering sapping China's economy

Inside sources say money laundering on the Chinese mainland must be up to a yearly sum of RMB 200bn yuan, a figure about 2 percent of the nation's GDP or a near equivalent of US$22.5 bn of the country's export earnings in China in 2001. China's 2002 Central Budget Deficit of RMB 309.8bn yuan would be cut by 64 percent when it should be covered by the money lost.

In 2000, China achieved a favorable trade earning of US$24.1bn and coupling with these was an investment amount of nearly US$40bn from abroad. But against these was merely a growth of US$10.97bn of foreign exchange reserve achieved over 1999. This is to say a yearly US$30bn had evaporated because of rampant money laundering.

Money laundering is undoubtedly seriously eroding China's economic basis. It is estimated that money laundering has already brought China a yearly loss of nearly RMB100bn yuan of tariff. Money laundering must likewise be blamed for corruption as the biggest social scourge plaguing China as experts' words were thus quoted.

Corruption and money laundering, two accursed social evils

Money laundering must be rooted in degeneration and corruption of those of financial and political officials. Corruption not only needs but also protects "money laundering".

The said RMB 200bn yuan yearly loss from money laundering can be divided into three parts: 70bn yuang of smuggling gain, 30bn yuan of embezzlement, and a transferred amount of tax evasion from foreign-funded companies.

In fact, all the three parts are closely tied up with malpractice of corruption, a malicious "cancer" nibbling on the world as is generally accepted by people. A persistent struggle is absolutely indispensable for eliminating the cause of corruption and money laundering in China.

China has taken many anti-corruption measures in recent years, but badger hats find more ways and means to launder their illicit income.

In addition, there are some defects in China's laws relating to money laundering. It is absolutely incomplete to define the upstream crime of money laundering only as "drug, reactionary gang, smuggling ", experts said. Concerned laws must be rectified, otherwise, the corruption will be more serious under the label of money laundering.

By PD Online Staff Huang Ying

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