China breaks up group moving US$3b overseas

BEIJING: Chinese police said they have broken up a gang that smuggled US$3 billion (RM12.35 billion) out of the country, evading financial controls imposed by Beijing to stem an outflow of capital from the economy.

Seven suspects were detained in the case centred in the southern city Shaoguan near Hong Kong but as many as 10,000 people might have been involved, the official Xinhua News Agency reported.

Chinese authorities have steadily tightened foreign-exchange controls to stem a multibillion-dollar outflow of capital that they said hampered financial management in the world’s second-largest economy.

The group in Shaoguan was accused of moving money illegally using 148 bank accounts opened in 20 provinces with stolen identity cards, said the Chinese news agency.

The Chinese news agency also said they made unspecified “huge profits” by trading on the difference in exchange rates between Hong Kong dollars and the mainland’s yuan.

Beijing allowed an informal financial industry to flourish over the past two decades to support entrepreneurs but is tightening controls due to mounting concern about financial stability.

Companies and investors rushed to export money after a change in the mechanism used to set the government-controlled exchange rate in 2015 prompted expectations the yuan would weaken in value. Bloomberg