Thursday, August 19, 2004 Posted: 0626 GMT (1426 HKT)

BEIJING, China (Reuters) -- About 4,000 corrupt Chinese officials have fled abroad in the past two decades, taking with them ill-gotten funds totalling more than $600 million.

That jaw-dropping figure was part of findings in a report issued by the Ministry of Commerce, details of which the official Xinhua news agency published on Thursday.

Mei Xinyu, the leading writer of the report, said China had the world's fourth-most serious problem with capital flight, Xinhua reported.

Chinese leaders have sounded warnings in recent years that the Communist Party could lose power if it fails to crack down on corruption, the scourge that toppled several imperial dynasties. Graft among government officials is consistently one of the main popular grievances.

Corruption was virtually wiped out in the years after the Communists came to power in 1949, but staged a comeback in the wake of economic reforms introduced in the late 1970s.

About 4,000 corrupt officials have fled in the past two decades transferring 5 billion yuan ($610 million) out of the country, the Ministry of Commerce researchers estimated.

"When I saw the report, I was shocked," said Ye Duchu, a professor at the Central Party School. "We should reduce such loopholes as soon as possible because all Chinese people really care about this.

"Definitely, our system and the system of administration have loopholes," he told Reuters. "Not one loophole, but several."

Many of the big cases involve dirty money being sent overseas through offshore finance centres, the report said.

Corrupt officials and some private firms used companies registered in offshore finance centres, such as the British Virgin Islands and the Bahamas, to transfer capital and illicit gains illegally, Xinhua said, quoting Mei Xinyu.

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