China Crackdown on Fake Trade Reaches $10 Billion

China has uncovered $10bn (£6.1bn) worth of fake trades as part of a nationwide crackdown on companies.

The currency regulator said 15 fraud cases had been handed over to the police for prosecution.

Companies sometimes falsify transactions as a way of getting money in and out of China.

“Fake trade deals can do severe harm to …the overall economy” said Wu Ruilin, deputy head of the State Administration of Foreign Exchange (SAFE).

“They not only increase the pressure of hot money inflows, but also provide illegal channels for cross-border capital flows,” he added.

Blame has also been placed on banks operating in China.

“Some banks facilitated the abnormal increase in transit trade financing and fake trade deals by failing to fulfil the responsibility of authenticity checks and offering services of transit trade financing and receipt and payment,” Mr Wu was quoted as saying in Xinhua – the state news agency.

The crackdown started in 13 provinces and cities last year, and has widened to 24 this year.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza