US$1.25 trillion moved out of mainland China illegally in 10 years, says report
Mainland losses from tax evasion, crime and corruption the largest among developing nations
China lost US$1.25 trillion between 2003 and 2012 to illicit outflows including tax evasion, crime and corruption, the largest loss of money among 151 developing nations surveyed, according to a Washington-based advocacy group that tracks such activities.
This number was described as "highly conservative" as it did not include cash settlements, common among drug dealers and money launderers, Global Financial Integrity said in an annual report on illicit financial flows.
"After a brief slowdown during the financial crisis, illicit outflows are once again on the rise, hitting a new peak of US$991.2 billion in 2012," 10 times the amount those countries received in official development aid, report authors Dev Kar and Joseph Spanjers wrote.
The growth in unlicensed outflows outstripped the rise in global gross domestic product and should give policymakers pause for thought.
Illicit outflows represent a circumvention of national taxation policies, meaning a net loss to local treasuries, and a knock-on disruption to balance of payments and fiscal policies; especially in economies like China's, which have strict capital control measures in place to restrict money going offshore.
China had the biggest outflow in 2012 of US$249.5 billion, up 53 per cent on 2011, the report said, citing data from the World Bank and International Monetary Fund.