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Thursday, 15 February, 2001, 12:28 GMT
China tackles corruption scam
graphic showing corruption in China
The Chinese authorities have launched a crackdown on tax fraud which could be the country's most serious case of corruption since the Communist revolution of 1949, according to a report in the UK's Financial Times newspaper.

The scam, mainly concentrated in the southern province of Guangdong, centres on the issuing of fake export certificates, thus enabling lucrative tax rebates to be claimed, the report says.

Some of the corruption cases are shocking. If we do not make up our minds to resolve the problem, there will be dire consequences

Jiang Zemin, Chinese President

Hundreds of corrupt officials and chiefs of trading companies are said by the paper to be being investigated by the government, and the total value of the fraud could be worth more than 4.4bn.

The problem was said to be so bad that it was artificially pushing up China's export figures and affecting its balance of trade.

In January exports grew at just 0.8%, their lowest level for 18 months, as the impact of the government crackdown on the fraud began to show through in the figures.

State officials, speaking anonymously to the FT, said the total value of the bribes paid to hundreds of corrupt bureaucrats and the rebates claimed from the fake certificates could total more than 4.4bn.

That was estimated to be the value of merchandise involved in China's previous worst smuggling scandal.

The cancer of corruption

China's President Jiang Zemin has repeatedly stressed that corruption in the Chinese Communist Party will lead to loss of popular support and the party's demise.

president jiang zemin of china
China's president Jiang Zemin has vowed to tackle corruption

He has said: "Some of the corruption cases are shocking. If we do not make up our minds to resolve the problem, there will be dire consequences".

In January, the man in charge of China's anti-corruption drive Wei Jianxing said the country's campaign against fraud must be stepped up a gear, and he listed new rules requiring provincial officials to declare their wealth and that of their relatives.

He was acting in response to what has been described as China's previous worst case of corruption last year, involving about 4.4bn.

Smuggling scandal

Dozens of officials went on trial after the smuggling scandal in Fujian province.

The scam centred on the southern port city of Xiamen, where the smugglers' booty was said to have included cars, oil, raw materials, heavy machinery and luxury goods.

Officials were reportedly bribed to turn a blind eye to the illegal trade.

The defendants were said to include a high-ranking policeman and senior bankers. Hong Kong.

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See also:

05 Jan 01 | Asia-Pacific
China steps up war on corruption
13 Sep 00 | Asia-Pacific
Corruption: End of China's Party?
13 Sep 00 | Asia-Pacific
China starts mass corruption trials
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