CAPITALISM'S ACHILLES HEEL Dirty Money and How to

144 CAPITALISM’S ACHILLES HEEL
by a young woman from the Central Committee of the Chinese Communist
Party. She was perfectly bilingual and as far as I could tell across the next
several days translated both sides of conversations accurately. I assume the
Central Committee was interested both in what I was asking and what I was
hearing. As well they should be, because in China the ripoffs are done by the
Reds themselves.
According to one source, researchers in China have reportedly estimated
that perhaps 80 percent of communist officials are guilty of corruption. 187
With party membership recently pegged at 64 million, this would suggest
that 51 million are compromised. In recent years more than three-quarters
of a million party stalwarts have been disciplined for corrupt practices. That
is the good news. The bad news is this leaves an estimated 50 million still
getting away with their financial shenanigans.
And the money they are stealing is staggering. IMF statistics for China
show “errors and omissions,” which is only a partial indicator of illegal outflows,
at $127 billion during the eight years from 1993 to 2001. 188 Because
this measure is limited to what can be recorded, it probably covers no more
than half of illicit flight capital during the period. The problem is understood
at the highest levels of government: “One official source quoted Zhu
Rongji, the premier, as saying in an internal meeting recently that capital
flight during 2000 and 2001 amounted to Rmb550bn [$66 billion] and
Rmb600bn [$72 billion] respectively, equal to about one-third of total government
revenues.” 189
Estimates of fraudulent funds coming out of China are always in the
hundreds of billions of dollars. My own inquiries lend credence to numbers
averaging in the range of roughly $20 billion to $40 billion annually since
1990. If these orders of magnitude are accurate, then China has illegally
transferred offshore upwards of $300 billion and perhaps as much as twice
this figure in the past decade-and-a-half. This rivals, maybe even exceeds,
Russia. Illicit outflows have continued strongly in the current decade, even
though the incomplete errors and omissions figures show some of it coming
back. If there is any country in the world where I could be significantly underestimating
illegal outflows, it is indeed China.
The official People’s Daily outlines the usual strategy of escaping with illegal
funds as follows: “[M]ost of the criminals behind various forms of capital
flight have turned out to be government officials or senior executives of
China’s state-owned enterprises. ... Typically the officials transfer money