Phony yuan endangers Beijing Olympics

By Zhu Jianguo

Published: July 03, 2008

Shenzhen, China — Less than 50 days before the Beijing Olympics open in August, an official from China's southeastern province of Guangdong announced that the People's Bank of China may be circulating counterfeit banknotes. This sent shockwaves around China, as what was supposed to be China's Olympic heyday was suddenly threatened by a possible scandal over fake money.

This could turn into a disaster to rival the previous ones that have struck China this year – the heavy snowstorm in southern China in January, the riots in Tibet in March, the train collision in Shandong in April, the earthquake in Sichuan in May and the rainstorms that flooded nine southern provinces in June.

Kuang Guojian, vice president of the Guangdong branch of the People's Bank of China, told the media on June 18 he could not guarantee that the bank would not circulate any counterfeit notes. The People's Bank of China oversees all financial institutions and banks in the country.

Most people tend to believe that fake money circulates only through black market channels, despite recent news reports that local bank officials are suspected of collusion in making and selling counterfeit notes. The Guangdong police department has announced that several officials are suspected of involvement in the production and circulation of nearly 600 million yuan (US$87 million) in fake notes. From time to time the media have reported that ATMs have issued fake 100-yuan bills; still, the public tends to view these as isolated illegal incidents related only to specific banks.

Kuang, a government official at the level of commissioner, explained that if a customer discovered that a bank had issued counterfeit notes he or she could "simply go to the counter to ask for genuine money instead." The bank seemed to be justifying the circulation of fake notes as a legitimate error, rather than offering to compensate the customers or even apologize to them.

Kuang said no bank would intentionally circulate counterfeit money. If a bank were found to be intentionally involved in counterfeiting, there would be severe punishment, he added. Yet he asked the public to be on the alert for counterfeit bills.

The bank official not only tried to shift responsibility for checking banknotes onto the customers, but also blamed criminals for mixing fake notes with real ones in the banks' ATM machines. "The machines are not without risk," he admitted.

In light of the corruption of many bank presidents and personnel, many of whom are currently serving time in jail, Kuang's confidence in the bank is not very persuasive.

It's not easy to determine if Kuang's statements – exonerating the bank from blame in illegally circulating fake money and shifting the responsibility onto others – were his own invention or whether they were authorized by a higher authority. Certainly Kuang did not receive any censure from higher authorities after making these statements.

The provincial Commission for Discipline Inspection of the Chinese Communist Party long ago announced that it was the duty of Party members to diligently fight against the counterfeiting of money. Now that Kuang has dared to legitimize the banks' crime in circulating phony money, doesn't his action make the regulation a fake too?

Meanwhile, it is odd that the Chinese government has dedicated itself to fighting the counterfeiting of ordinary products and services throughout the years, yet it cannot guarantee the authenticity of the state currency, the most critical commodity in the country, circulated by state banks.

If fake yuan can appear in banks all over China without arousing serious concerns, can the guests and athletes coming from all over the world be at ease during their visits to Beijing during the Olympics next month? As for Chinese citizens, they may all be busy checking their banknotes, leaving no time to applaud the opening of the Games.

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(Zhu Jianguo is a freelance writer and an independent researcher on "pseudo modernization," as well as a former journalist and editor. This article is translated and edited from the Chinese; the original can be found at www.chinaeweekly.com ©Copyright Zhu Jianguo)

http://www.upiasiaonline.com/Economics/2008/07/03/phony_yuan_endangers_beijing_olympics/9844/