China warns on fake yuan currency

China's currency is not freely convertible but its use is spreading

China's central bank has issued a warning about fake bank notes ahead of the Lunar New Year holiday.

The bank said 100-yuan notes bearing the "HD90" serial number have been reported in 10 provinces. They have also been found in Hong Kong.

A People's Bank of China statement said low-quality counterfeit detectors did not always manage to spot the fakes.

But it said the telltale signs could be spotted with the naked eye, and urged people to be vigilant.

"Though mostly counterfeit 100-yuan notes [worth $14.60] are not too hard to make out, people should be careful as cash transactions during the Spring Festival are high," the bank statement said.

"The fake notes start with 'HD90' and are aimed at cheating detectors, and some poor-quality detectors are easy to cheat," Ye Yingnan, of the central bank, was quoted by the Beijing News as saying.

But he said there was no need for panic.

"Those with experience are bound to tell the difference."

Hong Kong alert

The South China Morning Post, an English-language newspaper in Hong Kong, said police had seized more fake 100-yuan notes in the city recently, also with the HD prefix.

The forged notes, it reported, were believed to have been produced by a fraud syndicate in Taiwan, which was busted in October with the seizure of 100 million yuan ($14.6m) in fake notes.

Last Sunday, two mainland men were arrested in Hong Kong when they tried to buy goods with fake yuan notes, the newspaper said.

It quoted money changers in the city as unsurprised at new sightings of fake yuan notes. They said the more the currency was used, the more such resorts to fakery could be expected.

China announced recently that it would allow some trade with its neighbours to be settled with its currency, the yuan.

The yuan is not yet a freely convertible currency.

Beijing also announced late last year a 30-point directive in which it vowed to "support the development of yuan business in Hong Kong" and expand the use of the currency to settle trade with neighbouring countries.