The mainland is being flooded by counterfeit money, much of it made in Taiwan, and more than half the machines installed in shops to detect it fail to do so - because they too are fake.
Police seizures of fake yuan notes have increased sharply over the past 10 years, rising from 17.4 million yuan (about HK$16.3 million) in 1990 to hundreds of millions last year, the Beijing Morning Post reported.
Between last October and March, police in Beijing, Shanghai, Wuhan, Harbin and Guangdong cracked 160 cases and confiscated more than 100 million fake yuan.
In the first two weeks of January, police from the Beijing railway region seized 2.5 million fake yuan in raids on trains in north China, equal to their entire haul for all of last year.
In January, border police from southeast Shantou port found 74 million yuan of fake notes in a fishing vessel that had come from Taiwan. It was the mainland's biggest single seizure.
The main production centre for these fakes is Taiwan. In 1996, police in the Taiwan city of Taichung arrested four people who had printed 11.2 million of fake yuan.
Since then, production has spread to the mainland, with more than 20 factories discovered, along with sales and distribution networks.
The counterfeiting has involved not only 100- and 50-yuan bills but also 10-, five-, two-, one and 0.5 yuan bills.
Over the past four years, about 20,000 suspects have been arrested for involvement in counterfeit cases.
The new Criminal Law put into effect in 1997 contained specific punishments for counterfeiters, with the death penalty for the most serious offenders.
The spread of the fakes has become so widespread that controlling them has become a priority for national police and Interpol.
Many urban shops have a machine staff use to check if the 100-yuan bills they have been given are genuine. If they are fake, the machine will announce it, in a lugubrious voice. But the technology of the counterfeiters has surpassed that of the machines, many of which are unable to detect the fakes.
More than half of the machines are themselves fake, rendering them almost worthless, a Beijing television programme said on Sunday.
Sales staff have therefore been trained to 'look, feel and listen' to the notes to judge if they are fake. They must shake them and they will be genuine only if they have a 'crisp' sound.