Illicit Financial Flows?
The talk seems to always be about China cheating in one way or another, but Peterson put together a strong report in China defense. The topic is illicit financial flows, and blaming China for misrepresenting their imports. Take a look at the following report, it’s worth it.
Capital Flight – The process by which trade misinvoicing facilitates capital flight is relatively simple. For example, a Chinese firm sells $100 million of goods to an American firm, but declares to Chinese authorities that the price is only half of that—$50 million. It will then repatriate the declared amount—$50 million—back to China through normal channels. The undeclared amount is kept in an offshore bank account controlled by a subsidiary. The end result is that $50 million evaded China’s capital account restrictions and left the country.