Lost $3.79 Trillion in Illicit Financial Outflow- China.

The illicit making of money by a Class called Politicians are bleeding the Countries, irrespective of the Systems they follow.

China”Wen Jiabao’s familyand ,Bo Xilai have been caught and been disgraced.

The implications of this is brought out by Global Financial integrity in its latest report.

‘ The bulk of its estimate, 86.2%, comes from alleged trade mispricing, as Chinese exporters massage reported sales figures with help from their foreign partners to hide profits abroad. But there are many ways for funds to find their way overseas, from art to gambling. Over the last six years, GFI believes some $596 billion in Chinese funds have been moved to tax havens.

While GFI’s estimates are large, it’s clear this is a very real phenomenon: A more conservative figure for outflows from a Standard Chartered bank economist relying only on public data suggests that at least $71 billion left China just this past summer. Another recent estimate suggests some $225 billion left in the year leading up to September 2012(http://qz.com)

Mispricing.

Global Financial Integrity (GFI), an American research group that campaigns against illicit financial flows, believes this mis-invoicing is rampant. In a new study Dev Kar and Sarah Freitas of GFI compared China’s reported exports to the world with the world’s stated imports from China. They also juxtaposed China’s purchases from the world, with the world’s exports to China. In principle the figures should match. But the two economists found huge discrepancies between them (see chart). If, as Mr Kar and Ms Freitas recommend, China’s trade with Hong Kong and Macau is excluded, the country appears to have understated its exports and overstated its imports by a combined $430 billion in 2011.

These estimates are hard to take at face value. They imply that China’s true current-account surplus (which includes its trade surplus plus one or two other things) was almost 20% of GDP at its peak in 2007 (officially it was about 10%). But even if the figures are illustrative, rather than definitive, they highlight the difficulty of curbing the cross-border flow of capital in a country with such a heavy cross-border flow of goods.”(economist.com).

Here is the Report fro GFI.

Click the Link.

http://www.gfintegrity.org/storage/gfip/documents/reports/ChinaOct2012/gfi-china-oct2012-report-web.pdf