China finds USD 10 billion in fake trade deals

China has uncovered fake trade deals worth nearly USD 10 billion, the country's foreign exchange regulator said today, following an investigation aimed at illegal cross-border capital flows.
A large number of companies were found to have forged, altered and reused documents to create fake trade deals, Wu Ruilin of the State Administration of Foreign Exchange (SAFE) told a regular briefing in Beijing.
"Fake trade deals can do severe harm to... The overall economy," said Wu, deputy head of the management and inspection division, according to a transcript posted on the SAFE website.
"They will not only increase the pressure of hot money inflows, but also provide a channel for the illegal cross-border transfer of funds from illegal criminal activities," he added.

China keeps tight controls over capital flows into and out of the country due to fears they could disrupt the economy, the world's second-largest.
Since April 2013 the regulator had launched an investigation to crack down on fake trade deals in 13 provinces and cities and expanded it to 24 provinces and cities this year.
As part of those investigations, authorities probed entities involved in the fraudulent trade financing incident uncovered in June at Qingdao port, located in eastern China, in which the same batch of metal inventories were used as collateral to secure bank loans, according to Wu.
The government body had handed over 15 of the fake trade cases to police, he said.