But it is not just a passion for cards that brought more than 13.2m mainlanders to Macau in the first ten months of this year. Many come to elude China’s strict limits on the amount of yuan people can take out of the country. A government official who has embezzled state funds, for example, may arrange to gamble in Macau through a junket. When he arrives, his chips are waiting for him. When he cashes out, his winnings are paid in Hong Kong dollars, which he can stash in a bank in Hong Kong or take farther afield.
“There are many ways to launder money, more than we can think of,” says Davis Fong, an associate business professor at the University of Macau. Some bypass junkets and instead use pawnshops and other stores, where they buy an item with yuan and promptly sell it back for Macanese pataca or Hong Kong dollars—less, of course, a generous cut for the shopkeeper. No one can quantify how much money is laundered in Macau, but it’s “such an obscene amount of money you would die”, one resident avows.
Mainland China offers scant legal protection for private property. The rich, many of whom cut corners to get that way, know they could lose it all suddenly. Many also fear losing their political patrons next autumn, when China’s Communist Party will anoint a new generation of leaders. Small wonder they are seeking havens for their money and their families.
According to the Hurun Report, a wealth researcher, some 14% of rich Chinese say they have already left the country or are filling out paperwork to obtain a foreign passport. Another 46% are considering one of these steps. A recent report by Bank of America Merrill Lynch warned about the destabilising effects of “hot money” speeding out of China this year.
Monday, December 12, 2011
Wealthy Chinese Trying to Smuggle Money Out of China
From The Economist, a look at the gambling industry in Macau, and how it is helping wealthy Chinese nationals to move money out of China and into foreign currency.
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