52 Billion Dollars Laundered Last Year

November 23, 2007 12:00 am Last Updated: November 23, 2007 12:00 am

According to Hong Kong-based Ta Kung Pao newspaper, approximately 387 billion yuan (about US$52 billion) from mainland China was laundered through Shenzhen in 2006.

This “black money” represented at least 10 percent of the total gross product of the city, while the actual percentage may be close to 20 percent.

Director Guo Shiping of the Institute of Finance at Shenzhen University said that most of the money laundered overseas was transferred through underground banks located in Guangdong, Fujian, Zhejiang, and other coastal provinces. The underground banks in Guangdong and Fujian sent money to Hong Kong primarily through Shenzhen.

Shenzhen is the nursery of underground banking, according to Guo. He said that a huge amount of state-owned assets has been swindled by government officials. These assets, along with gains from drug sales, smuggling, prostitution, gang activities, and pirated products, all need to be laundered.

Guo said that the persistent presence of laundered money in Shenzhen has also contributed to rising real estate prices in the area.

In addition, the projected inflation of the Chinese yuan has induced a large amount of foreign currency to flow into China through Hong Kong and Macao, also using underground banks. Laundered money has therefore entered both the stock and real estate markets.