by VOA News
The nearly $10 billion in fake business deals Chinese regulators Thursday announced they have discovered is just the “tip of the iceberg” of the money flowing out of China, says one leading U.S. financial expert. Jim Rickards, author of the book Currency Wars: The Making of the Next Global Crisis, says: “Wealthy elites are getting their money out of China before the [financial] collapse comes.” Rickards said it’s been happening for a long time, but Chinese authorities seem less willing to look the other way. Some people in China have managed to circumvented currency controls by disguising their personal financial transactions with the ordinary course of international business, which appears to be what the Chinese were talking about in their announcement this week. For example, Rickards said a Chinese manufacturer sets up a Panamanian subsidiary and sells its product for half of what the parent company knows the subsidiary will get from the sale of the products. When the sales take place, the Chinese company has a lot of money in Panama. The financial crisis in China is coming, Rickards is certain. He says the country has relied too heavily on investment to drive economic growth. He said there is nothing necessarily wrong with using investment to grow the economy, but in the case of China, it has been financed by debt, which has been sold to retail investors who have been left very, risky junk bonds.