China, US to exchange bank info

Reciprocal deal on accounts to aid anti-graft drive: expert

China and the US appear set to provide each other with reciprocal bank information, according to media reports.

Despite there being no official confirmation from Chinese authorities as yet, the reports have caught the attention of many people, with analysts predicting that such a policy would greatly benefit China's anti-corruption campaign.

According to The Wall Street Journal, the US Treasury said Thursday that it had initiated an agreement with China to help implement a 2010 federal law aimed at curbing offshore tax evasion, which will take effect on Tuesday.

Although the two countries are still scrutinizing the fine print before officially signing it, the Journal said the US and China entered into "a type of reciprocal agreement" which means the Chinese government will give the US government information on US-owned financial accounts and the US in turn will provide bank information on Chinese nationals' US accounts.

"The treaty will help better regulate 'naked officials' from China as long as they haven't taken up US citizenship. Similarly, it could put a restraint on corrupt officials," a professor from Shenzhen University, who spoke on condition of anonymity, told the Global Times.

"Naked officials" refer to officials whose spouse and children have emigrated overseas.

The professor said the agreement will benefit China more as there are far more US-based assets owned by Chinese nationals than US citizens who hold Chinese bank accounts.

China has strengthened its corruption crackdown over the past two years, with disciplinary authorities paying extra attention to "naked officials."

Zhong Jun, a scholar with the Economy and Social Construction Research Center under the Chinese Academy of Social Sciences, told the Global Times that the US is the main destination for Chinese "naked officials," which makes the information exchange between the two countries a good opportunity for further strengthening China's anti-corruption campaign.

However, it is possible that corrupt officials will seek other places, such as countries in Latin America, to hide their illicit income after the signing of the agreement, analysts say.

Despite the fact that the new law was initially aimed at combating overseas tax avoidance for the US government, it is also an effective measure in counter-terrorism.

"Strengthening the surveillance on US citizens' overseas accounts will help increase information transparency. The move will also track capital flows, a key anti-terrorism measure since terror attacks rely heavily on financial support," said Tan Minxian, a professor from Xi'an Jiaotong University.

Other analysts, such as Yao Xuange, a tax expert, said that the treaty would prevent US citizens from transferring their assets overseas and fuel the nation's domestic economic growth with more domestic consumption.

"Under the trend of global economic integration, the exchange of bank information will help boost both economies and facilitate capital connections," said Gong Chengyu, an economist in Bejing.