This was an old article written by Mr. Richard Giedroyc last year.
Fake Coins Big Business in China
By Richard Giedroyc
September 04, 2007
Most world coin collectors will sooner or later come into contact with counterfeit coins of the Chinese Empire and from the period of the republic. Coin dealer Stephen Album's comments on finding these coins for sale in markets throughout the Peoples' Republic of China have been published in this column in the past.
There are two types of counterfeit coins -- contemporary and modern. Contemporary counterfeits are of more interest academically since they were produced to deceive merchants and consumers when spent. Modern counterfeits of collector coins are produced for a different reason, that reason being because coin collectors pay a premium for certain genuine older coins for their collections.
Up until recently, the majority of Chinese counterfeit currently appearing in markets are coins that are modern copies of earlier issues coveted by collectors. Now, however, current legal tender coins of the PRC are being counterfeited as well. And, it appears to be big business.
The counterfeiting has become so blatant that the Nanfang Weekend newspaper in the city of Nanfang recently interviewed two employees of a merchant in the counterfeiting trade who explained just how open the trade in counterfeit coins has become.
The two persons interviewed simply identified themselves as B Zai and A Wei and as employees of what the newspaper called a "fake coin retailer" in the city of Guangzhou, which is the capitol of the southern province of Guangdong.
Their employer is not the counterfeiter, but is simply a distributor who purchases the fake 1-yuan coins wholesale, then sells them to local merchants at the discounted price of 35 fen each (It takes 100 fen to equal one yuan; 7.72 yuan equal one U.S. dollar, according to the most recent issue of MRI Banker's Guide to Foreign Currency.) The merchants apparently then use the bogus coins in transactions, knowing fully well these are counterfeit coins.
How big is the business? According to A Wei, who identified himself as being in charge of sales, it is big enough that there are competitors and that territorial disputes happen all the time.
A Wei gave some details about the distribution chain as well. He said his boss purchases the counterfeits from a major operator he identified as Shun Ge. Shun is based in Guangzhou, but relocated late in 2006 to the Hubei Province capitol of Wuhan because of what the newspaper described as "a crackdown on fake money businesses."
Shun in turn was also interviewed by the Nanfang Weekend, a surprising feat that illustrates just how the trade actually operates in the full view of law enforcement. Shun told the newspaper his products were made by what he called "the best manufacturer in central Hunan Province," and were sold in cities in Guangdong and Hunan provinces.
Shun is quoted as saying, "Most coin identification machines cannot detect them from genuine ones."
Shun admitted he has contacts not only in organized crime (what he called the "underground world"), but in the government as well.
Don't get the false impression corruption is rampant among Chinese government officials. Being a corrupt government official in China means you are taking a big risk. Corrupt officials sometimes find themselves being executed in the PRC for such crimes as accepting a bribe. In fact, criminals being executed in the PRC are required to purchase the bullet with which they will be shot.
The Ministry of Public Security recently listed eight cities including Guangzhou and Wuhan as major targets for counterfeit coins. In September 2006, the minister held a meeting with police from four provinces, then conducted raids on counterfeit coin factories in all four provinces, including in the city of Changsha in Hunan.
The July 6 issue of the China Daily newspaper reported that eight tons of counterfeit coins were seized in one of the 2006 raids. The factory was reported to have been hidden under a pigsty. During the first eight months of 2006, law enforcement in Hubei confiscated more than 10.52 million 1-yuan coins, according to the newspaper.
Ministry of Public Security Officer Li Ziyong is quoted in the China Daily story as saying, "Coins are simple to copy as they do not have anti-counterfeit safeguards."