UnionPay is a Chinese government backed bankcard company. It is currently being used by thousands to smuggle billions of dollars into other countries and the special region of Macau. Macau is the only place in or around China where gambling is legal. This is one of the main places where billions of dollars are being illegally moved to.
The daily limit of money allowed to be moved out of the country is 3,200 USD, but people are ignoring this and moving thousands of dollars at a time out of China. People use pawn shops as laundering bases where they receive their money using the title of “general sale”.
Authorities in Macau are turning a blind eye (or not so blind) to this activity as it is bringing in billions of dollars to their casinos and the Macau economy. So why isn’t the Chinese government cracking down on this illegal activity as they do with all other illegal activity. Well the answer may lie in Macau’s economy. 80 percent of the city’s revenues come from gambling, and stopping this illegal money transferring may cripple the city’s economy. It will be interesting to see how China deals with this problem.
Source: Reuters UK
Perhaps this trend could have bearing over the central government’s concerns regarding the amount of cash currently in circulation. I expect China will take measures to stop people from continuing to do this, but is it possible that this illegal cash outflow could help to balance out the substantial cash injections around the Chinese new year?
I guess the point is that the system is corrupted. The authorities who are in charge of this must have been bribed by the gamblers. However, I guess this is a dilemma. I still think that the government has to take actions against corruption even it is for the economy. Macau should also find a way to promote its economy other than depending on gambling.
Is it reasonable for China to regulate the manner in which people use there money? I don’t think China should have any right to limit the amount of money a citizen can move with. Perhaps the answer to this corruption lies in deregulation, rather than stricter enforcement. After all, if China legalized this common practice they would not have to try and stop it.
The blatant ignoring by local governments of supposed national rules is something we’ve encountered again and again this term. Macao has quite a bit of autonomy – it’s formally an SAR (special administrative region), de facto independent, and it’s very hard to crack down on this from the Chinese side.