When Hawala Meets Dìxià Qiánzhuāng: Trade-Based Settlement and Cross-Ethnic Trust in European Criminal Finance
Year: 2026
Type: preprint
Abstract: Research on informal value transfer systems has generally treated Chinese underground banking (dìxiàqiánzhuāng) and hawala as separate, culturally bounded phenomena. This paper argues that such a framing mayno longer hold — at least not in Europe. Drawing on three recent law-enforcement operations (Italy 2023, Spain2025, France–Spain 2024), this paper argues that hawala networks and Chinese brokers are not running parallelsystems but operating a functional division of labour: hawala operators aggregate criminal cash at the retail level,while Chinese money-laundering networks clear the resulting obligations wholesale through trade-basedsettlement.To explain why this convergence is possible and how it is sustained, we develop a Settlement Arbitrage Modelgrounded in Transaction Cost Economics (Williamson 1985) and the economic theory of clubs (Buchanan 1965;Schramm and Taube 2003). The model proposes that Chinese brokers undercut rival laundering providers bycross-subsidizing their fees with arbitrage income from two commodity corridors: European luxury goodsshipped to China via daigou networks, and low-cost manufactures exported from Yiwu to Africa, the Middle East,and Latin America. Value transfer occurs through duìqiāo (ledger offsetting) rather than physical currencymovement — a claim consistent with the complete absence of RMB (PR China currency) banknote seizures in theEuropean enforcement record. Cross-ethnic cooperation appears to rest not on shared cultural identity but oncommercially verified, iterated performance: what we call "professional trust."
Author: Jungmann, Alexander
Language: English
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7168266254
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