Sources disclosed, "In fact, for traders and export enterprises, making false reports has long been familiar activities with them. The larger the export province, the more serious situation is for suspected export amount, and the more difficult to detect.” In Guangdong, Fujian, Zhejiang, Shanghai, there are some companies specialized in series false export procedures to help enterprises boom their business. The Customs is difficult to detect the suspected exports dealt by these specialized companies.
It is learned that the initial purpose for enterprises to falsify exports is mainly to cheat export tax rebate from the state. The source said: "with the daily increasing competition in export of textile products and clothing industry, this phenomenon is widespread."
To increase the amount of export tax rebate, export enterprises usually inflate the amount of export products, and the associated value-added tax invoices have to be fraud, too. "If the value of products exported to the US was $100,000, then they would declare $300,000 to the Customs, in this way, rebate would add to the more than $20,000.” he explained.
After the exports, "The false reported $200,000 would be converted into RMB by those foreign funds through the accounts of Chinese traders and eventually enter Chinese market.
"These foreign investors could invest into China's stock market, real estate speculation. Now, the demand for foreign capital to enter Chinese market has been larger than the demand China's enterprises for export rebate fraud, as the exchange between US dollar and RMB can be smoothly achieved through such means.”