China started a campaign to stop the use of offshore companies to transfer the ill-gotten gains from corruption and bribery overseas.

The People’s Bank of China, the central bank, will join with four ministries including the State Administration of Foreign Exchange, to crack down on underground banks, offshore company accounts and other illegal means of transferring cash gained from corruption, according to a central bank statement today.

The campaign, which will last until the end of the year, dovetails with the “Sky Net” operation whose focus is on capturing fugitive officials, the bank said in the statement. Tracking down economic fugitives and bringing them, and their ill-gotten assets back, has become a key component of President Xi Jinping’s anti-corruption campaign.

“China’s anti-corruption drive faces severe challenges with officials fleeing the country with huge amounts of money, and no way to stop it,” said Zhuang Deshui, a governance professor at the Peking University who specializes in anti-corruption. “By promoting this operation, China could build a mechanism to stop the transfer channels.”

The Sky Net campaign, which incorporates the so-called “Operation Fox Hunt” that the official Xinhua News Agency said had led to the repatriation of 680 fugitives suspected of economic crimes, is making waves overseas.

David Fuller's view

Corruption is a problem in every economy but it is epidemic in undemocratic regimes, not least because people see it as the quickest way to gain sudden wealth, and also keep it if they can transfer funds and leave the country.

Xi Jinping will surely know that he can reduce the problem if he encourages additional private wealth creation and gives companies the protection of ethical rule of law.