This document discusses illicit financial flows from China between 2003 and 2012. It defines illicit financial flows as money illegally earned, transferred, or used. China was found to have the highest illicit financial flows in the world during this period, totaling $1.25 trillion or 11.1% of GDP. Nearly half of all illicit financial flows from developing countries during this time period came from China. The document suggests China should focus on solving this issue by setting new regulations, increasing citizen engagement, curtailing dirty money flows, and learning from other countries' examples.

1. Illicit Financial
Flows in China
Presented by Ha Thu Luong

2. What is illicit financial flows?
 Illicit Financial Flows (IFFs) is “money illegally
earned, transferred or used,” with money
understood as funds or assets. (World Bank
2015)
 2 main areas:
• Proceeds of criminal activities.
• Legally generated revenue and income that
become illegal either because of their use.

3. IFFs’ effects on developing
countries?
 Direct: IFFs as an important source of public
domestic financing for development goals.
 Indirect: IFFs affect investment, interest rates
and inflation.
A crucial issue since if we solve it, development
process will be improved.

4. Illicit Financial Flows from Developing
Countries: An Upward Trend

5. Illicit Financial Flows in China
from 2003 to 2012
 China was the country with highest IFFs in the
world (Global Financial Integrity’s Report
2014).
 Hit $249.57 billion in 2012.
 Led in the unsanctioned outflows in almost
years during that period.

6. Source: Global Financial Integrity (GFI)

7. Why should China focus on
IFFs?
 Cumulative loss from China over 10 years (2003-
2012) totaled $1.25 trillion.
 IFFs was equivalent to 11.1% of GDP.
 Up to 47% of all illicit financial flows from
developing countries between 2001 and 2010 to
China.
Therefore, solving illicit financial flows is an
urgent task for Chinese Government.
Source: Global Financial Integrity (GFI) Reports

8. Obstacles to solve IFFs Issue in
China
 Rising Inequality
 Illicit Money comes back to country in the
form of foreign direct investment
 High level of corruption
 Weak controls from Government

9. Suggestions to Solve IFFs Issue
in China
 Setting up new regulations to remove commercial
tax evasion, criminal activities, public corruption.
 Increasing Citizen Engagement by raising trust in
public institutions, avoiding inequality between
citizens.
 Curtailing the flow of dirty money by reforming
customs and trade protocols.
 Learning from some successful examples of
solving IFFs Issue, e.g.: Bangladesh to get
positive results.

10. Bibliography
 Global Financial Integrity, Illicit Financial Flows from
Developing Countries: 2003-2012
 Stella Dawson, Dirty money costs developing world $6
trillion, led by China: report. Retrieved from:
http://www.reuters.com/article/us-funds-global- illicit-
idUSBRE8BH00220121218#UkpkEZpIgP1TpCZH.97
 Global Financial Integrity, Illicit Financial Flows from China
and the Role of Trade Misinvoicing
 Gabriel Wildau, Analysis: Spectre of capital flight slows
China FX reform drive. Retrieved from:
http://www.reuters.com/article/us-china-economy-
idUSBRE8BI1GR20121219#IPijEkZeLCyzhX4K.99