Ill-gotten gains held overseas pose sanctions risk for China

o13-iconWang Xiangwei, a columnist for the South China Morning Post, says that following Russia’s annexation of Crimea, Western efforts to freeze assets of Russian officials should motivate Chinese leaders to crack down on assets their own officials hold abroad.

As the crisis unfolds, Chinese authorities are treading carefully in their responses publicly, calling for dialogue. Privately, however, officials and ordinary mainlanders alike have been intrigued and are watching closely to see how the sanctions play out.

Internet users have been particularly amused by the nonchalant response from deputy Russian prime minister, Dmitriy Rogozin, who is among those on the sanctions blacklist.

On Twitter, he laughed off US President Barack Obama’s decision to name him while trying to squeeze Putin’s inner circle, asking if “some prankster” came up with the list.

In one tweet addressed to “Comrade@BarackObama”, Rogozin asked: “What should do those who have neither accounts nor property abroad? Or U didn’t think about it?”

Rogozin’s cheeky response was widely shared on the mainland’s social media scene. Some of the country’s more cynical internet users have wondered aloud whether Communist Party officials could be so dismissive if they found themselves in a similar situation, facing Western sanctions of overseas assets.

The conclusion is a resounding no. It is an open secret that corrupt officials move billions of US dollars in ill-gotten gains overseas every year, parking them in offshore accounts or investing them in property. A recent report by the International Consortium of Investigative Journalists estimated that wealthy Chinese sent US$1 trillion overseas from 2002-11, potentially making China the world’s biggest exporter of illicit capital, ahead of Russia and Mexico. [Continue reading…]

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