Financial scams are emerging in China on an epidemic scale. Rising costs of living have enticed many to join these scams, says Victor Shih, associate professor in political economy and China expert at the University of California San Diego to the BBC. Local government did not step in.
BBC:
It’s a social problem the government is fighting to contain.
Victor Shih, associate professor in political economy and China expert at the University of California San Diego, says a combination of factors have spurred the spread of these scams.
“The rapid proliferation of pyramid schemes is caused by high growth in living costs, especially housing costs, which enticed many to look for higher returns – and previously light regulation at the local level,” Prof Shih says.
Under pressure to grow their economies, local governments had in the past endorsed some dubious investment schemes – without properly understanding them – on the belief they would deliver strong returns and spur growth.
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