White collar offences up an average 4.8pc annually during the past five years A state newspaper has raised the alarm over a steady increase in financial crime in Shanghai, saying the prevalence of the trend threatens the city's rise as an international financial centre. The report followed a recent property scandal involving local developer Chau Ching-ngai, who is under investigation for tax fraud, improper bank borrowing and other financial problems, state media has reported. The International Finance News, managed by the People's Daily, cited official statistics as saying financial crimes in Shanghai had risen an average 4.8 per cent annually during the past five years. Financial crime was second only to contract fraud among all types of so-called 'economic crimes', the newspaper said. The Shanghai Supreme Court said in February that the city's courts handled 35,669 financial cases in the past five years, up 93 per cent from the previous five-year period. 'Shanghai is China's biggest city moving forward on the front line of reform and financial activity, so financial crimes are relatively high,' Liu Xianquan, head of the law department at the East China University of Politics and Law, was quoted by the newspaper as saying. Mr Liu said that authorities were currently overwhelmed by the sheer volume of cases and could not anticipate being able to investigate them all. Shanghai is home to one of the mainland's two stock exchanges, a futures exchange and the nation's foreign exchange market, interbank market and gold market. An official of the Shanghai office of the China Securities Regulatory Commission, Zheng Xiaoping, said that securities-related crime fell into four main categories: market manipulation, false information, insider trading and asset transfers. He cited the 2001 case of Shenzhen-listed Yorkpoint Science and Technology. Regulators fined four investment consultancies for manipulating the company's stock price. For asset transfers, one common trick was overvaluing assets bought by a listed company benefiting the seller at the expense of the firm. Banking industry officials said new products and the rise of transactions using the internet meant that financial fraud would inevitably rise. Banks needed to improve internal controls and staff supervision to try to prevent financial crime, the report said. Experts said steps to reduce financial risk and improve the regulatory framework would also help prevent crime. The report made no specific mention of property developer Chau. The China Securities Journal has reported that he used bank loans to speculate on the stock market, misused funds and evaded tax.