China Business Uncovered Podcast #8: Inside Italy’s Chinese Underground Banking Rings

Program description:

China Business Uncovered takes listeners inside China’s business world through the eyes of reporters who investigate it firsthand.

Featuring open conversations with Caixin journalists, each episode breaks down the most complex developments inside Chinese companies. Tune in to understand how critical stories are covered, what’s really happening beneath the surface, and why it matters for businesses and investors operating in and around China.

Recorded in Mandarin and produced in English with the help of AI, China Business Uncovered brings Caixin’s in-depth investigative reporting to a global audience.

Episode intro:

For more than a decade, Italian authorities have been trying to shut down Chinese underground banking networks moving billions of euros across borders. But they keep coming back.

One recent investigation centers on Yang Lifeng, a businessman from Wenzhou in East China’s Zhejiang province who rose to become an influential leader in northern Italy’s Chinese business community. Prosecutors allege that his network used shell companies and fake invoices to move 32 million euros ($37.3 million) through accounts across Europe and into the Chinese mainland and Hong Kong.

In a separate investigation, Italian authorities uncovered an alleged 5 billion euro fake-invoice scheme involving 433 shell companies and more than 60,000 Italian businesses. More recent probes have also found Chinese underground banks allegedly providing financial services to drug traffickers and some of Italy’s most powerful mafia groups.

In this episode of China Business Uncovered, host Kelsey Cheng speaks with Caixin finance reporter Yue Yue about how these underground banks operate and make money, how they have become so deeply rooted in Italy, and why years of police crackdowns have failed to stamp them out.

More importantly, these cases reveal the more layered roots of these networks. In Wenzhou, borrowing money from relatives and friends has long been a common way to finance small businesses, particularly before modern banking became widely accessible. When those informal financial practices followed Chinese migrants overseas, they served legitimate business needs — but they could also be exploited to hide cash, evade taxes and launder money.

Chapters:

(02:24) From entrepreneur to alleged money-laundering ringleader

(06:12) How the “fake invoice factories” worked

(12:12) The secret “cupola meeting” at a Chinese business gala

(16:24) Italy’s long crackdown on underground banking

(23:55) Wenzhou migration and the roots of informal lending

(32:29) Why regulators struggle to stamp out the networks

This episode of China Business Uncovered was based on this story:

Italy Intensifies Crackdown on Chinese Underground Banking Networks

Produced by Kelsey Cheng and Du Bohan.

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