A number of states have enacted laws prohibiting Chinese and others from “countries of concern” from purchasing homes or land.
U.S. Department of State, "2015 International Narcotics Control Strategy Report," March 18, 2015
Drug and Chemical Control
China is a significant destination and transit country for illicit drugs, as well as a major producer of synthetic drugs and drug precursor chemicals. According to China’s National Narcotics Control Commission 2014 Annual Report on Drug Control in China, heroin is the most abused drug in China followed by synthetic drugs such as ketamine, methamphetamine, and other amphetamine-type stimulants (ATS). Ethnic Chinese criminal groups control most large-scale drug and precursor chemical criminal activities in China. In addition, there are a large and increasing number of transnational criminal organizations from Mexico, Colombia, West and East Africa, and Pakistan operating in China.
Heroin is smuggled into China from Burma, Laos, Vietnam, Afghanistan, Tajikistan, and Pakistan, for domestic consumption and also for further transshipment to lucrative markets in other parts of Asia and Australia. Methamphetamine and other ATS drugs manufactured in Burma also enter China from the “Golden Triangle” region (Burma, Laos, Thailand), and Vietnam. North Korea is also believed to be a major source of methamphetamine in China.
China is a major producer and exporter of precursor chemicals for legitimate industrial use. The exact number of chemical producers in China is unknown; however, according to Chinese authorities, there are about 400,000 chemical distributors or suppliers in China. Many large chemical factories are located near coastal cities with modern port facilities, increasing the opportunity for criminal syndicates to divert legal shipments for illegal use. Most precursor chemicals seized in Mexico and Central America for the production of methamphetamine were either smuggled or diverted en route from China. Acetic anhydride, used for the manufacture of heroin, is smuggled into Southwest Asia from China.
China is also a significant producer and exporter of methamphetamine and new psychoactive substances such as synthetic cannabinoids – known by such names as “K2,” “JWH,” and “spice” – and synthetic cathinones – commonly known as “bath salts.”
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Money Landering and Financial Crimes
According to Global Financial Integrity (GFI), China leads the world in illicit capital flows. GFI estimates that over $1 trillion of illicit money left China between 2003 and 2012. Massive outflows continue. Chinese foreign exchange rules cap the maximum amount of yuan individuals are allowed to convert into other currencies at $50,000 each year and ban them from transferring yuan abroad directly. A variety of money laundering techniques are used to circumvent the restrictions.
The development of China’s financial sector has required increased enforcement efforts to keep pace with the sophistication and reach of criminal networks. The primary sources of criminal proceeds are corruption, narcotics and human trafficking, smuggling, economic crimes, intellectual property theft, counterfeit goods, crimes against property, and tax evasion. Criminal proceeds are generally laundered via methods that include bulk cash smuggling; trade-based money laundering; manipulating the invoices for services and the shipment of goods; the purchase of valuable assets, such as real estate and gold; the investment of illicit funds in lawful sectors; gambling; and the exploitation of the formal and underground financial systems, in addition to third-party payment systems. Chinese officials have noted that corruption in China often involves state-owned enterprises, including those in the financial sector. While Chinese authorities continue to investigate cases involving traditional money laundering schemes, they have also identified the adoption of new money laundering methods, including illegal fundraising activity, cross-border telecommunications fraud, and corruption in the banking, securities, and transportation sectors. Chinese authorities also have observed that money laundering crimes continue to spread from the developed coastal areas such as Guangdong and Fujian provinces to underdeveloped, inland regions.
China is not considered a major offshore financial center; however, China has multiple Special Economic Zones (SEZs) and other designated development zones at the national, provincial, and local levels. SEZs include Shenzhen, Shantou, Zhuhai, Xiamen, and Hainan, along with 14 other coastal cities. As part of China’s economic reform initiative, China opened the Shanghai Free Trade Zone in September 2013.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/
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