China – growing pains

The pace of wealth creation in China is only matched, if not exceeded, by the explosion in fraud. Official corruption and an urgent desire by foreign companies to preserve good relations with the authorities mean that the business environment is set to remain fraught with dishonesty. Mark Godfrey reports from Beijing.

As China’s economy grows, financial fraud seems to be feeding off the accumulating wealth. Professor Hu Angang at Tsinghua University in Beijing, and prominent Chinese economist Fan Gang have established that around 16% of GDP is lost to white-collar crime in China. This compares with a fraud rate in the USA estimated by the Association of Certified Fraud Examiners at around 4-5% of American GDP.