Flying Money Def China and Its Global Impact

Flying money def China has become a global phenomenon, with its impact felt far beyond China's borders. It's estimated that over $1 trillion in counterfeit currency is produced annually.

The Chinese government has taken steps to combat the issue, but it remains a significant challenge. In 2019, Chinese authorities seized over 1 billion yuan (approximately $145 million USD) in counterfeit currency.

The widespread circulation of counterfeit currency has led to a loss of trust in the Chinese financial system. This has made it increasingly difficult for individuals and businesses to conduct transactions with confidence.

As a result, many Chinese citizens have turned to alternative forms of payment, such as mobile payments and cryptocurrencies.

Chinese Flying Money, or feiqian, has been around for over 1,200 years, originating as a rice-trading system during the Tang Dynasty.

This ancient financial settlement scheme has evolved into a sophisticated trade-based system that enables wealth transfers outside the regulatory oversight of the international banking system.

The key to its success lies in the fact that the money never actually leaves China, it's just the commodities that get moved around as part of a longer payment chain among the Chinese diaspora around the world.

Feiqian uses an established Chinese account holder abroad as a channel to add smaller amounts to an official invoice to a supplier, with the supplier then paying out the extra amount in cash on the receiving end.

It's a low-cost and trusted method of remitting money, much like the Islamic hawala transfer system, but with a twist – it's not a straight swop, it's an exchange in stored value that leaves no paper trail except for in the books of the operators of secretive underground Chinese banks.

The system is operated by elderly, well-established women in a closed-off network of mutually trusted contacts, making it even more impenetrable to investigators.

Over the past 10 years, feiqian has become increasingly visible in the surge in wildlife contraband trade, stimulated by a global shortage of hard currency.

Hong Kong serves as the largest seafood market in the world, making it the feiqian system's front door into mainland China.

Feiqian, also known as bills of exchange, originated in China during the Ming dynasty.

In the 16th century, merchants in China used feiqian to facilitate trade by allowing them to draw on a credit line with a bank or another merchant.

The feiqian system, also known as Chinese Flying Money, is a sophisticated trade-based financial settlement scheme that has emerged as the key enabling mechanism in the $260-billion-a-year international wildlife contraband market.

It's a system that's been around for over 1,200 years, originating as a rice-trading system during the Tang Dynasty. Modern systems have morphed over time, but the core idea remains the same.

The feiqian system allows illicit commodities to function as a form of currency, enabling wealth transfers outside the regulatory oversight of the international banking system. This makes it a major obstacle in investigating organised wildlife trafficking and related crimes.

A former Singaporean finance expert explained that the trick behind feiqian is that the money never actually leaves China - it's just the commodities that get moved around as part of a longer payment chain among the Chinese diaspora around the world.

This system has given Chinese business an edge in Africa's construction sector, with untraceable income used to under-bid local competitors and grease palms for contracts. It's a system of invisible and untaxed trade that's hard to detect.

The feiqian system is often operated by elderly, well-established women in a closed-off network of mutually trusted contacts. This adds an extra layer of complexity to investigating and tracking down those involved in the system.

Over the past 10 years, feiqian has become increasingly visible in the surge in wildlife contraband trade, stimulated by a global shortage of hard currency.

The Balance of Payments is a crucial concept when it comes to understanding how a country's economy interacts with the rest of the world.

A Balance of Payments is a statistical statement that records a country's economic transactions with the rest of the world over a specific period of time.

It's essentially a ledger that shows all the money flowing in and out of a country.

The Balance of Payments is made up of three main components: the current account, the capital account, and the financial account.

The current account shows the country's trade in goods and services, as well as its income and expenses.

A large trade deficit, like the one China had in 2018, can indicate a country is spending more money than it's earning.

The capital account, on the other hand, records investments made by foreigners in the country, as well as investments made by the country's residents abroad.

Foreign direct investment, or FDI, can be a significant source of foreign capital for a country.

The financial account shows the country's transactions with the rest of the world in terms of financial assets, such as stocks, bonds, and loans.

China's financial account has been heavily influenced by its large trade surplus and foreign exchange reserves.