Skip to content

How Money Flees China

On November 4, 2015, Laohucaijing published a report on how money flees China. The article stated that, typically, the newly wealthy Chinese use seven different ways to transfer their assets from China overseas.

To use a Hong Kong underground exchange for the transfer, the mainland Chinese client first visits Hong Kong and opens a bank account. Then he visits a currency exchange that provides him an account in mainland China. Once this mainland China account receives yuan, the bank account in Hong Kong receives the equivalent in foreign exchange. 
Another method is for the mainland Chinese client first to deposit yuan in a Chinese underground bank which then provides a foreign exchange check drawn on a Hong Kong bank. The client will then visit Hong Kong to cash the check. 
Another method involves local currency exchange agents in China. They secure enough people who will use their residence cards to exchange up to $50,000 per residence card and then remit the foreign exchange directly overseas. Some people just carry foreign exchange in cash when travelling overseas. One of the State-owned commercial banks, Construction Bank, now offers a service that allows clients to borrow foreign exchanges against the yuan deposit at the Construction Bank as collateral. For Chinese tourists, many use credit cards or debit cards to “purchase” high dollar items in a designated store overseas, and then immediate ask for refund. The store will then pay the refund in cash rather than to the card used for the purchase. Import and export trading companies often engage in such money laundering as a side business. 
Source: Laohucaijin, November 4, 2015