On this episode of China Uncensored,
the Chinese regime wants to stop rich people
from moving their money out of China.
I’m sure they’ll listen.
I mean after all,
they got rich in Communist China
by following all the rules.
Hi, welcome back to China Uncensored.
I’m Chris Chappell.
China is home to more than a million millionaires.
Which is odd for a communist country.
I guess you’d call it “communism lite.”
Or maybe “socialism with benefits.”
Well, one of the most popular activities for Chinese millionaires
is getting their money the Feng Shui out of China.
Money is flowing out of China
on the scale of several hundred billion dollars a year.
And Chinese authorities are scared.
It could hurt their economy.
Plus all the millionaires now have less money
left over to bribe them with.
So a few years ago,
the Chinese government passed a law:
A Chinese citizen is only allowed to transfer
the equivalent of $50,000 US dollars
out of China each year.
$50,000?!
That’s not even enough to buy a single
diamond-encrusted bathtub for your puppy!
So it should be no surprise
that China’s wealthy have come up with ingenious ways
of getting large sums of money out China
without technically breaking the law—
or at least without getting caught.
A lot of millionaires launder money
through casinos in Macau.
But after that terrible typhoon flooded the city
back in August,
a lot of them might be looking for new ways
to launder their money—
without getting it wet.
Which is why I’ve compiled this helpful list
of 5 additional ways Chinese elite
can get their money out of China.
Number 5:
“Smurfing”
It’s named after the little blue cartoon creatures
that demonstrate the value of teamwork.
Like when all the smurfs got together
to kill Gargamel and bury his body.
Or was that fan fiction?
Well, this kind of smurfing refers to
using teamwork to get money out of China.
If a rich person wants to transfer
more than $50,000,
he can “smurf” it—
by getting a group of family and friends together—
and they each individually transfer $50,000
into his overseas bank account.
Where did those family and friends
each get their $50,000?
How the smurf should I know?
Number 4:
Returning Merchandise
You can only transfer $50,000,
but you can still buy as much junk as you want
when you travel overseas.
So let’s say a Chinese tourist visits Paris.
He can take his Chinese debit card and buy,
say, a $20,000 Rolex.
And then immediately return that Rolex
to the store for cash—
minus a small service fee.
He’s just gotten foreign currency,
without technically touching his $50,000 quota.
The only downside is,
now he has no idea what time it is.
The Chinese government eventually
caught onto this, though.
Now they’re monitoring
all overseas debit card transactions
of more than $150.
That should put a stop to it.
Unless...
instead of buying a single $20,000 Rolex,
he buys 500 individually wrapped
plastic Casio watches.
This could work, people.
Number 3:
Underground Banks
Carrying a briefcase full of Mao money
across the border may work in movies,
but like most things you see in the movies,
it’s a stupid idea in real life.
Like building a baseball diamond in a corn field,
and hoping dead guys will show up.
But there’s a smarter way
to carry money across the Chinese border
that doesn’t require a suspicious briefcase:
A paper check.
Fortunately,
there are underground banks in China
that would be happy to provide this service for you.
There’s lots of them.
They’re part of that shadow banking system
you hear about.
So you go to one of these shady,
underground banks and give them
your Chinese money.
They reach out to a shady bank in Hong Kong,
and then use that bank to write you a check
in foreign currency.
Now, all you have to do is take that check,
put it in your pocket,
and walk across the border to Hong Kong.
And then cash that check at a legitimate shady bank.
Like Citibank.
Hong Kong is legally separate from the rest of China,
so those pesky currency rules don’t apply there.
Is this method of getting money out of China legal?
Well, technically you weren’t the one
who transferred Chinese currency into foreign currency,
so...sure.
Probably.
Maybe.
Number 2:
Hong Kong Money Changers
When I was in Hong Kong last year,
I saw tons of money change shops like this one.
At first, I wondered,
how there could be so many of these,
just for exchanging currency for tourists?
Well, it turns out,
they have a more lucrative business model
on the side.
Fook Kee Seeds.
Just kidding.
The side business is helping rich people
move money out China.
It works like this.
You—a Chinese millionaire—
travel across the border to Hong Kong
and set up a normal bank account
at, say, Citibank.
Set up the account in US dollars.
Then you go to a money change shop.
The money changer will give you a bank account number
at their bank inside China.
Then you call your own bank inside China,
and have them wire transfer your money
over to the money changer’s bank account.
That money is still in yuan,
and it stays in China.
But a couple hours later,
after the wire transfer is confirmed,
the money changer will deposit an equivalent amount
of US dollars into you Hong Kong account—
minus a small fee.
This may sound sketchy,
but it’s technically legal,
because no money ever crosses the border.
You’ve just got to trust them
that they’re going to give you your money
after that first transfer.
It’s like when a tourist visiting New York
asks a local to take a photo of her,
and hands him her expensive camera.
It’s all about trust.
And Number 1:
Expensive Art
For the truly en vogue Chinese elite,
the best way to legally move
large amounts of money out of China
is with expensive art.
Buy an expensive piece of art in China.
For example,
this ink splatter painting by modern artist Hua Tunan.
What’s it worth?
10 dollars?
Maybe.
But with the frame—
10 million.
So you, the en vogue millionaire,
take your Chinese money and buy
this expensive piece of art/crime scene photo.
Then you pack it up and take it with you
to the land of art aficionados—America—
where you sell your
painting/handkerchief from a coal miner
to an American collector for US dollars.
He can hang it on his wall
next to his velvet Elvis painting.
Just make sure you sold him the original,
and not accidentally a placemat from Applebee’s.
And ta da—
you’ve just gotten cash in a foreign currency
without moving any money across the border.
And hey, don’t stop at paintings.
You could probably sell Americans
all sorts of objects at inflated prices:
statues, ceramics,
or the beard of a Daoist master
ground up with rhino horn powder and melamine.
So between these five methods,
plus a bunch of others that I haven’t even mentioned—
China’s wealthy have no problem getting their money
out of China on a large scale.
No one knows exactly how many millionaires
are transferring money like this—
since keeping it secret is kind of the point.
But next time you see a Chinese guy in a suit
walking down 5th Avenue in with an ugly painting
and 500 Casio watches,
you’ve found your man.
So if you were a Chinese millionaire,
which method would you use?
Leave your comments below.
Once again, I’m Chris Chappell.
See you next time.
Thanks for watching.
And if you *are* a Chinese millionaire,
the best way to make sure
you keep getting episodes like this
is to support China Uncensored.
With your money.
Money that I assume is about to be transferred
safely out of China.
You’re welcome.