China's Financial Weapons of Mass Destruction

EXPOSING CHINA'S FINANCIAL WMDS Curtis Ellis describes vast array of Beijing's nefarious shell companies

China has targeted American manufacturing for extinction. Beijing’s subsidies, intellectual property theft, product dumping and hacking violate every rule in the book.

But all that is only a small part of China’s aggression.

One must look into the financial sector to begin to understand how China is undermining Western economies.

China’s communist bosses have been stashing millions of dollars in anonymous shell companies far from its shores.

These companies engage in wholesale money laundering, drug smuggling, sanctions-busting and market-distorting schemes that corrode the integrity of every institution and every country their tsunami of cash touches.

The International Consortium of Investigative Journalists traced some 22,000 of these secretive companies back to China and Hong Kong. The owners include some of China’s richest and most powerful men and women – including President Xi Jinping’s brother-in-law, Deng Jiagui, co-owner of a real estate company registered in the British Virgin Islands. Deng also invests in rare earths, metals used in cellphones and other high-tech electronics.

These shell companies are being used to prop up rogue regimes in North Korea and Iran as well as to hide the ill-gotten gains of China’s Red elites.

For example, North Korea funnels virtually all of its trade and finance through Chinese cut-outs. The Justice Department filed criminal charges against one Chinese firm with over 22 different front companies in everywhere from the British Virgin Islands to Wales, Hong Kong and the Seychelles, all set up to evade sanctions against North Korea.

Most famously, Huawei, the Chinese telecom-cum-espionage company, is accused of using a shell company based in the tiny island nation of Mauritius to bust Iran sanctions.

These anonymous business entities are also being used to kill Americans. Chinese producers of illicit fentanyl, the potent synthetic opioid ravaging our country, hide the proceeds of their deadly trade inside a labyrinth of shell companies.

Besides financing murderous regimes, laundering communist cash and poisoning Americans, these companies are themselves financial weapons of mass destruction, corrupting legitimate businesses and markets.

An influx of China’s fugitive money has driven up real estate prices and made it impossible for middle-class residents of places like Vancouver, British Columbia, to buy homes in their own city.

Western accounting firms and banks, such as PricewaterhouseCoopers, UBS, Credit Suisse and Morgan Stanley have acted as middlemen in helping Chinese clients set up trusts and companies.

And that leads to another problem: Some of the largest players in our financial sector are helping China work the system – and making money doing so.

More than 130 Chinese companies with a combined valuation of over $1 trillion are listed on U.S. stock exchanges. But the accounting practices of Chinese companies are opaque.

“The complex legal structures of these U.S. listings, as well as China’s state secrecy laws and opaque auditing practices allow some Chinese companies to shield themselves from U.S. legal and regulatory jurisdiction,” the U.S.-China Economic and Security Review Commission reported. “As a result, these listings could pose significant risks for unsuspecting U.S. investors who buy into U.S.-listed Chinese companies.”

You see, the problem is not just in exotic locales like the British Virgin Islands or the Cayman Islands – the United States has provided a haven for anonymous companies as well.

But Washington is finally waking up.

The bipartisan Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform (COUNTER) Act updates anti-money laundering rules and empowers law enforcement to uncover who’s behind these anonymous shell companies. It was recently voted out of the House Financial Services Committee unanimously.

There has been remarkable bipartisan agreement on the need to stand up against China’s outrageous behavior.

To do that, we need to follow the money China uses to scam the system, fund rogue regimes and undermine our national security.

Shedding daylight on shadowy companies and increasing transparency in the financial sector is a good place to start.

Copyright © 2019 Curtis Ellis, All rights reserved.