Chinese will do crazy things to smuggle money out of the country

“A Chinese woman boarding a flight to Hong Kong to come to the United States was apprehended by border control authorities. She had wrapped her body in so much cash that she could barely walk and I think that tipped them off,” Asia Society’s Vice President of Global Programs Bruce Pickering told Yahoo Finance.

Physically strapping cash to one’s body is one of several ways Chinese are bringing money offshore. The national bankcard UnionPay is a key way that Chinese are paying for large ticket items abroad, according to Pickering, who describes it as a “super ATM card.” UnionPay is China’s only domestic bank card organization (operated under the approval of the People’s Bank of China) and it’s the third-largest payment network by value of transactions processed, after Visa (V) and MasterCard (MA). The cards can be used in 150 countries and regions outside China.

Pickering says UnionPay cards can only be used for smaller purchases in the United States but are readily accepted elsewhere. “In countries like Canada, for example, you can actually buy real estate just by swiping your card and it’s been an easy way to facilitate cash transfers,” he says.

But as stringent capital controls are being placed on Chinese individuals, China’s State Administration of Foreign Exchange (SAFE) imposed a temporary limit on cash withdrawals from UnionPay cards. Currently, Chinese are only able to move $50,000 per year out of China. Despite Beijing’s attempt to limit capital outflows, there are loopholes, of course.

By pooling their UnionPay with friends and family and less legitimately through Hong Kong, Taiwan and Macau, Chinese are able to make large purchases, according to the Asia Society.

There are additional programs that have been introduced to provide alternative legitimate channels to transfer more than the allowed $50,000 per year specifically for real estate purchases. Last year, China’s Securities Times (the official newspaper authorized by the China Securities Regulatory Commission) reported that the government is rolling out a new program called the Qualified Domestic Individual Investor (QDII2) program, which would allow Chinese citizens to invest directly in overseas assets including equities and real estate.

Pickering says though China’s regime remains staunchly authoritarian, it’s vital that it create new avenues for individuals to invest their money overseas because it will happen one way or another. “The government likes to see where the money’s going and to know exactly what you’re spending on,” he says. “For the Chinese, it’s proven time and time again that if you try to land too hard on [the people], the money tends to squish out in other ways. They’ll try to move the cash in suitcases and other means.”