The Financial Times published this story about a US State Dept report that poses the possibility that international drug-trafficking cartels are laundering their illicit gains in China’s poorly regulated financial systems:
"The US on Wednesday expressed concern that ever more sophisticated drug-trafficking cartels were using China’s inadequately controlled
financial system to launder their proceeds, possibly even getting tax
breaks in the process."
The State Dept also cites the IMF’s estimate that altogether some US$24 billion is laundered in China each year, of which the drug trade forms only a part. Much of the laundering has to do with domestic tax evasion. Many times, evaders use offshore companies to invest their undeclared profits back into China as FDI, thereby claiming legitimate tax benefits.