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    » 12/16/2014, 00.00

    CHINA

    China loses US$ 1.25 trillion to tax evasion and corruption



    According to a report by Global Financial Integrity, illicit outflows from the mainland grew exponentially over a ten-year period. Tax evasion and corruption are the main reason. This makes China the biggest loser among 151 developing nations.

    Beijing (AsiaNews/Agencies) - Mainland China lost US$ 1.25 trillion between 2003 and 2012 to illicit outflows including tax evasion, crime and corruption, the largest loss of money among 151 developing nations surveyed, according to Global Financial Integrity, a Washington-based advocacy group that tracks such activities.

    This number was described as "highly conservative" as it did not include cash settlements, common among drug dealers and money launderers, some analysts wrote.

    "After a brief slowdown during the financial crisis, illicit outflows are once again on the rise, hitting a new peak of US$ 991.2 billion in 2012", ten times the amount those countries received in official development aid, report authors Dev Kar and Joseph Spanjers wrote.

    Indeed, the mainland won the Oscar for the biggest outflow in 2012 with US9.5 billion, up 53 per cent on 2011. The second-largest cumulative outflow was in Russia, which lost an estimated US$ 973.8 billion between 2003 and 2012. Mexico and India were third and fourth, losing US4.2 billion and US$ 439.5 billion respectively.

    As a continent, Asia accounted for 40.3 per cent of unauthorised financial flows from the developing world during the period. "Not all illegal money movement is money laundering," said risk consultant Julian Russell.

    In China, capital control rules "encourage an underground economy for people providing a facilitation service to move money", he added. In many cases, laundered money ends up reinvested in the mainland as tax-free foreign investments.

    This is a major problem in China where President Xi Jinping, when he came to power, launched a campaign against corruption and petty officialdom against "tigers" and "flies," i.e. powerful leaders and lowly bureaucrats.

    Yet, despite arresting and quickly trying high-profile figures, many analysts believe that such a campaign is a way for Xi to use corruption as an excuse to get rid of internal opponents.

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    See also

    30/07/2009 TAIWAN - CHINA
    Case against Chen Shuibian concludes, ruling set for September 11
    In the final hearing the former president insisted that he is innocent and a victim of a political process, pro-Beijing. If found guilty, he risks a life sentence. In July, his wife and son distanced themselves from his position, admitting some of the allegations.

    11/02/2009 TAIWAN
    Wife of former president admits to money laundering
    Former First Lady Wu Shuchen admits receiving US$ 2.2 million and taking them out of the country without her husband’s knowledge. She denies charges of corruption. Experts suggest that by admitting to lesser charges she is trying to regain some public sympathy and prevent her husband from being found guilty on more serious charges.

    21/01/2009 TAIWAN
    Relatives of former president admit money laundering
    Chen's son, daughter-in-law, and son-in-law have admitted to moving money out of the country. At pretrial hearings, Chen reiterates that these are political accusations, fabricated by China and by current president Ma.

    13/11/2008 TAIWAN
    Chen begins hunger strike, supporters plan protests
    The former president is protesting over "political accusations," and is receiving support from some members of his party. His followers plan public protests, including in front of prison. Today, his son-in-law's sentence of 7 years in prison for insider trading was upheld.

    30/12/2008 TAIWAN
    Ex-President Chen Shui-bian back in jail
    After 12 hours of deliberation, district court accepts prosecution’s case against release because of the gravity of the crimes and the risk the accused might alter evidence. Chen insists he “will continue to stick up for his good name.” Trial is set for March.



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