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Spenders' new worry

(China Daily)
Updated: 2009-01-14 07:35

The approaching Spring Festival, a traditional shopping season for Chinese people, surely makes the fight against counterfeit money more urgent.

But there is a much larger economic context for the battle. The country's long-term need to boost domestic consumption into a major growth engine makes it a pressing task for the central bank to come up with effective measures to crack down on counterfeit currency. A pre-holiday warning about high-quality fake banknotes is not enough to assure consumers that it is time to spend.

Fake 100-yuan notes, most starting with the serial number "HD90," have recently been found in more than 10 provinces and cities across the country.

The People's Bank of China was quick to acknowledge the reports as well as public fears they stirred.

On Monday, its Shanghai headquarters said that it had strengthened cooperation with the public security and commerce authorities while ordering commercial banks to upgrade their counterfeit detection system. In addition, it called on non-banking businesses to check for loopholes and upgrade detectors, and urged counterfeit detector manufacturers to develop upgraded versions of their products.

Such efforts are definitely needed to keep fake banknotes out of circulation.

Yet, to protect ordinary people from becoming victims of counterfeit money, the central bank's call for the public to be alert against the fake money during the Spring Festival holiday is far from enough.

The central bank is right in insisting that the counterfeit banknotes have obvious differences from real ones. But it makes little sense to count on every individual's capacity to know the differences to spot fake money.

On the one hand, the massive endeavor required to get everyone familiar with the differences of the fake notes that can even pass through low-quality counterfeit money detectors, in itself, involves a huge social cost.

On the other hand - and this is worse - the additional trouble it adds to dealing in cash, a dominant phenomenon in China, can cost many business opportunities. Instead of spending happily, worried consumers are more likely to save themselves from unnecessary exposure to the risk of receiving fake money.

Chinese consumers have already had too many problems like the quality of goods or services to worry about. If policymakers want to persuade consumers to spend more to cushion the Chinese economy from the impact of the global slowdown, they should do more to quickly dispel their worries over their cash.

(China Daily 01/14/2009 page8)