The People’s Bank of China (BOC) is allegedly verifying a report according to which an important Chinese bank is helping clients transfer large amounts of money overseas in a program that is apparently violating currency controls.The bank is accused of money laundering. BOC is among the country’s “Big Four” state banks and the main foreign exchange bank. It has denied all accusations.
In a report, China Central Television (CCTV), which made these accusations in the first place, compared BOC to an “underground bank”, as a result of images showing a BOC official telling a client that the BOC was willing to “launder” his money. The state-run station aired an approximately 20-minute program on Wednesday accusing the bank of money laundering on a large scale. “Even dirty money can be processed through the foreign exchange channel for investment immigration purposes, in that case, what’s the difference between a bank and an illegal, underground house? ”
China has some strict rules when it comes to the exchange rate of the yuan or renminbi, limiting capital flows into and out of the country. Current regulations limit individuals to converting the equivalent of $50,000 per year. However many foreign banks assist BOC to bypass the restriction. A consultant from an Australian Bank cited by CCTV says that BOC is regarded as the safest underground bank.
In spite of these, the business had managed to export about 20 billion renminbi (more than $3.2 billion), according to an account that focuses on finance and has reached nearly 1.2 million followers. About 10 billion renminbi was moved out in the first half of this year, according to statement s given by “industry sources.”
The president, Mr. Xi, has declared war against the “tigers” and “flies,” or corrupts officials belonging to all levels. Even the Communist Party has been strongly involved in the market, by playing a “decisive” role in economic decision-making. In spite of all these efforts, economic reform has moved tremendously slow over the past year, especially compared to the eagerness and lust of the Party’s anti-corruption campaign.
Moreover emigration has become an attractive alternative for many Chinese, because of increasing concerns over pollution, health, education, care, food safety and legal protections in a country lacking an independent judiciary.
Speaking about market control, The U.S. Treasury Secretary and his delegation left Beijing last night, after an attempt to to get China to strengthen the value of the yuan. China had reportedly agreed to reduce intervention in its currency markets to “what are really extraordinary circumstances,” Treasury Secretary Jack Lew said. This is definitely a turnaround in China’s policy.
