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How the Chinese get their money out

Getting money out of China is not that hard. Talking about all those complicated schemes, the reality is that there are tons of simple ones.  The best is called transfer pricing.  Let's say you own a French export firm that sells widgets, and you buy the widgets for $5.00 each.  You then export the same widgets to China at $10.00 a widget.  If you own both the importing and exporting firms, you will have transferred $5.00 per widget out of China.  I'm exaggerating for effect, but the potential is easy to see.

Other tricks are more complicated, you imported 500,000 tonnes of iron ore per month, but the real imports are only 75% of that total...who will count.  The truth is that in a global trading system, it is very difficult to stop money from exiting.  

I am always amazed when I hear about all these complicated schemes (art was a good example some years ago).  The other system is "underground" financial institutions, but that doesn't work well when the flow is all one way.  

Still, the best and most used is the first, we call it transfer pricing, and it's been around for a long long time.  

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