Peking’s Bustling Black Market Doing a Brisk Business

A young man in dark glasses and a fake fur hat stood against a brick wall a few yards from his curb-side banana cart--stalking his next target.

Fang Limang, 22, craned his neck and spotted a foreign woman approaching down a quiet sidewalk in Peking’s sedate diplomatic quarter.

As the woman neared the cart, Fang and a toothy male companion jumped out.

“Bananas?” called one, brandishing a bunch of the mushy, Equadorian decoys.

“Change money?” asked Fang with a sly glance.

Hard to Avoid

The banana assault, unthinkable a year ago, is hard for tourists and foreign residents to avoid in Peking today, as Chinese brashly risk arrest to get their hands on foreign currency certificates needed to buy stereos, VCRs, motorcycles, refrigerators, cars, imported fashions and other scarce consumer goods.

Fang (a pseudonym), who wants a color TV, is one of scores of sidewalk black marketeers who began surfacing in the capital last summer, growing more aggressive as their ranks burgeoned into a small army of illegal currency dealers.

Strategically stationed outside all major hotels, at prime tourist spots and near foreign residence compounds, these daring dealers do a brisk business, some trading more than $350 a day--quite a handful for the average Chinese, who earns a third that amount each year.

The black market is so widespread that some shops and restaurants are charging Chinese customers different prices depending upon whether they pay in local currency or foreign exchange.

“I give 1.6 renminbi for one yuan foreign certificate,” barked Fang, offering to exchange the local “renminbi,” or “peoples’ money” used by Chinese, for the notes issued only to foreigners.

A few blocks away in front of the posh, Jianguo Build-the-Nation Hotel, a hatless, shabbily-dressed man assailed passing foreigners with a 1.8-to-1 offer.

“I use the foreign money to buy imported cigarettes,” said the man, 23-year-old Ying, who sells the tobacco for a small profit.

Turned to Black Market

“I’ve been doing this for several months,” said Ying, who, like many of his fellow profiteers, turned to the black market after years of “waiting for work”--the Communist Party’s euphemism for unemployment.

Around the corner and down the street, a tall young man sporting a leather jacket hovered over a tangerine cart near the gate of Sun Altar Park.

“Help me out, change a little money,” called 21-year-old Mao to a passing foreigner, flashing a cocky smile.

Mao sells the foreign certificates to professional buyers, who routinely shuttle 1,300 miles south to Canton to buy consumer durables shipped in from the neighboring capitalist colony Hong Kong.

“Don’t worry about the police, they’re my buddies,” Mao said.

Peking taxi companies have built up such hefty stocks of foreign certificates that factories, firms and other organizations turn to them for currency rather than to the state-run Bank of China.

Some factories have even set up their own fruit stands as fronts for obtaining the foreign exchange they need to buy imported materials and equipment.

Brazen Unlawfulness

Western diplomats and businessmen said they doubt authorities will supress the black marketeering--some of the most brazen unlawfulness they said they have encountered in China.

They said officials in Peking, Canton and other major cities are tolerating the black market because it stimulates consumption and enables people to buy imported goods unavailable in state stores.

“It gets more goods into circulation, more goods that are in high demand,” said the Peking representative for a top U.S. bank.

“The black market serves a useful purpose in tamping domestic demand for consumer goods,” said an economist studying China. “It creates a de facto rationing system . . . so they don’t have to deal with the fact that they can’t satisfy all consumers.”

Some diplomats view the black market as part of a wave of economic crime and illegal arbitrage unleashed by pragmatic leader Deng Xiaoping’s loosening of rigid state controls over the economy.

“It’s somewhat politically threatening to have such a blatant disregard for the law,” said the banker. “But I have confidence that if they wanted to crack down they would, that they have the ability to stifle this.”

Allowed to Bloom

Peking authorities, however, deny they have allowed the black market to bloom under their noses.

“Those things are all lies,” said an official from Peking’s Economic Inspection Bureau, a municipal police unit. “The regulations are clear. Foreign certificates should be used by foreign residents of Peking and foreign tourists.”

“If a policeman came across this sort of thing, he would certainly interfere. We remain committed to our regulations and rules,” he said. But, he added, “sometimes” money trading goes on “under cover or without the presence of police.”