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China, Land of Flying Money

China, Land of Flying Money
Photo illustration by Julien Pradier
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A system of money transfer dating back to the Tang Dynasty is undergoing a revival, thanks to money smugglers in China.

While all eyes are on China’s fleet of spy balloons, we stick with our “follow the money” motto. This week, a guest post from a Whale Hunting reader (who wanted to stay anonymous) takes you through the narcotics cash odyssey that might be funding the CCP’s espionage operations:

Fei-chien – or “flying money” – is an underground banking system invented during the Tang Dynasty that allowed far-flung merchants throughout China to transact without having to lug metal coins across the country. It's a bit like the Hawala system popular in the Middle East and the Subcontinent.

This evolved into an easy way for the Chinese diaspora to send remittances. Based on mutual trust, the underground system facilitated money transfers at lower exchange rates without cash crossing borders.

Then, in 2017, the CCP cracked down on money exiting China to prevent the yuan from devaluation and to preserve foreign exchange reserves. This supercharged Chinese demand for US dollars, and a modern-day version of fei-chien became a convenient entry point for funneling illicit dollars, predominantly from the Latin American drug trade, into the banking system.

A closer look at how it all works is a window into links between organized crime and the Chinese Communist Party.

Rendered by Midjourney
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