America's North Shore Journal

BBC

Chinese police say they have shut seven illegal “underground banks” accused of laundering over 14bn yuan ($1.75bn; £0.9bn) this year.

Forty-four suspects have been arrested in cases in Guangdong, Inner Mongolia, Beijing, Shanghai, Liaoning and Heilongjiang, state media reported.

A total of 58m yuan has been recovered, economic crime investigator Han Hao told the Xinhua news agency.

The Ministry of Public Security officer said money laundering had “exploded”.

He said criminals were using the illegal banking operations to illicitly transfer money outside the country and to bypass regulations to buy and sell foreign currencies.

The Chinese government would like to characterize this as solely due to criminal enterprise. This portion of the underground economy is also a reflection of the currency disparities between the official value of the yuan and its market value. The rulers in Peking are yet agains discovering that they cannot defeat Adam Smith.