Radio Free Asia quoted a report from the German newspaper Süddeutsche Zeitung, which said that, in the past 10 years, through different means and various channels, the illegal funds fleeing from China reached a staggering US$3 trillion. Out of every two "black dollars" in the world, one is from China. It was estimated that, after the 18th National Congress of the Chinese Communist Party, when the authorities considered implementing the exposure of the personal assets of government officials, the capital flight accelerated to US$41.2 billion in November alone. Süddeutsche Zeitung reported that the second largest group responsible for the flight of capital was government officials.
Li Xinde, who runs a website that monitors Chinese public opinion, believed that the cause of the problem was the current policies and laws that involve anti-corruption, exposure of personal assets, and supervision of power.
A Beijing economist Zhong Dajun attributed the rampant capital flight to the current social political system, where a person can become rich quickly but develop a strong sense of insecurity after becoming rich. A 2011 report from China’s central bank revealed eight major means that corrupt officials use to transfer their property: cash smuggling, remittance fraud, current account fraud, overseas investment, credit card spending, creating an offshore financial center, foreign direct receipt, and transfer through offshore special relationships.
Although China has strict foreign exchange regulations, more and more rich people continue to transfer their money overseas. Hexun, a Chinese financial news portal, reported that China’s capital flight using even the most simple and primitive method–hiding bundles of cash in ones luggage–has accelerated.
Source: Radio Free Asia, January 10, 2013