Recently, a company in Qingdao, Shandong Province, was fined nearly 18.64 million yuan for violating Chinese Communist Party foreign exchange regulations and making a profit of 591 yuan, sparking heated discussions among netizens.
According to a fine notice published by the Qingdao branch of the State Administration of Foreign Exchange of the People’s Republic of China on June 24, Qingdao Xingxinchang New Material Technology Company was fined almost 18.64 million yuan for “violating regulations by bringing foreign exchange into the country” and had its illegal gains of 591.63 yuan confiscated.
The basis for the penalty was Article 41 of the Foreign Exchange Management Regulations, which states that violators who bring foreign exchange into the country in violation of the regulations shall be ordered to rectify the situation by the foreign exchange management authority and fined an amount of less than 30% of the illegal fund; for more severe cases, a fine ranging from 30% up to the equivalent amount of the illegal fund is imposed.
On June 28, a person in charge of the Qingdao branch of the State Administration of Foreign Exchange told Red Star News that Qingdao Xingxinchang is a foreign-invested enterprise. Through investigation, it was found that the company exhibited typical characteristics of a “false foreign investment” shell company, swiftly converting the funds brought in into what appeared to be underground money broker-controlled accounts, creating a circular operation.
The individual also stated that this form of false foreign investment, using the method of “capital inflow + underground money broker outflow,” not only fails to promote local economic development in terms of taxes and employment but also deviates from the original intent of policies aimed at attracting foreign investment to bring in technology and managerial talent. It is also detrimental to economic decision-making, and actions against this conduct are deemed necessary.
The company violated regulations outlined in notices from the foreign exchange bureau, engaging in illegal foreign exchange activities totaling 28.83 million US dollars (approximately 186 million yuan). It was penalized at a rate of 10% of the total funds brought in, resulting in a fine of nearly 18.64 million yuan.
Regarding the illegal gains, it was calculated based on the interest generated from the imported funds; due to the short retention period of the funds, the total interest amounted to 591.63 yuan.
Online discussions among mainland Chinese netizens ensued:
– “How much should officials who embezzle billions be fined?”
– “Falsifying nucleic acid tests to earn illegally obtained 80 billion yuan, how much should be fined?”
– “Companies selling fake vaccines make tens of billions in profit, yet are fined only thousands.”
– “There was a mining company fined over 5,000 yuan, while an elderly man selling green onions was fined tens of thousands.”
– “Farmers selling vegetables illegally and making a profit of just tens of yuan are fined 100,000 yuan.”
– “Light penalties for officials, heavy penalties for the people – the absurdity of these fines has made the public question their legitimacy!”
– “The chaos of administrative fines has reached madness. Cases like money laundering should be investigated and handled by the economic investigation departments and police. Administrative units repeatedly issue huge fines for their own benefit, as after turning in these fines, 20% is returned to the unit, so it’s a lucrative practice.”
According to Tianyancha, a business information platform, Qingdao Xingxinchang New Material Technology Company was established in June 2021 as a single-owned enterprise by a legal entity from Hong Kong, Macau, or Taiwan with a registered capital of 50 million US dollars and is currently experiencing abnormal business operations.
The company’s registered address is on Hong Kong Road in Jiaozhou City, Qingdao. Its business scope includes services in the promotion of new materials technology, sales of metal materials, and sales of metal products.