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China’s ‘Shadow Economy’ Threatens Stability

From the China Compliance Digest (Issue No. 23: July 9, 2012):

In the first of a series of articles on how the world’s wealthy hide their money, the Pittsburgh Tribune-Review gave special attention to the massive outflow of China’s new millions.
The paper offered stunning statistics. For every dollar invested in China by Western companies, according to the Trib, four dollars end up in offshore accounts.
According to Global Financial Integrity (GFI), a Washington, D.C.-based research organization advocating worldwide tax reform, China’s illicit overseas outflow of funds between 2000 and 2009 totaled $2.7 trillion.  

GFI placed China at the very top of its list of countries with the highest measured cumulative illicit financial outflows during those years. The organization concluded that trade mispricing was the method used to move the majority of that money out of China.

GFI economist Sarah Freitas told the Trib she predicts the effects of corruption will soon cause a collapse of Chinese Communist Party infrastructure.
Sources: Pittsburgh Tribune-Review


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