Chapter 112 - 82: Verification! Nobody Knows Compliance Better Than I Do

A sophisticated form of subsidy fraud...

There are many ways to make money illegally in this business. You could use fake identities to scam government subsidies, buy low and sell high, or, of course, engage in direct trafficking.

But among them, there is one particularly sophisticated method.

Although this practice was stopped in ’24, it already existed here in 2002. It was...

"Exploiting the international adoption quotas."

Xu De said offhandedly, then turned to look at Lin Yue.

"True Monarch, are you familiar with this?"

Lin Yue opened her mouth, then fell silent for a moment before nodding. "I am."

Then, after taking a deep breath, she began to explain, her clear voice reaching Wang Chao’s ears.

"That man, Zheng Tong, buys attractive and healthy children from human traffickers. Then, using his own connections, he forges plausible backstories for them as abandoned infants."

"Next, he arranges for them to be taken in by the Jiaqin Welfare Institute in Lusen City."

"Then he transfers the children directly to an orphanage in the provincial capital."

It was a simple concept.

Think of it like this: Zheng Tong buys a piece of candy from a corner store, then gives that candy to someone else.

But the problem was...

"How does he profit from that?"

Wang Chao asked, surprised.

’Zheng Tong is buying the "candy" purely for profit. If he gives it to someone else and expects to make money, then that person would have to pay a higher price than the original store.’

But that raised a question.

’If someone else wants candy, why wouldn’t they just go to the store themselves!?’

By the same token,

’the big-city orphanages in the provincial capital want children, but aren’t they already taking them in all the time?’

"The key is that these large orphanages..."

Lin Yue paused, then revealed a little-known fact.

"They have quotas for international adoption!"

"In other words, a set number of slots for foreign couples to adopt orphans from Dongguo."

Most people probably never consider this.

If a foreigner wants to adopt an orphan from Dongguo, can they just ask and it’s done?

No, they can’t.

Ninety-nine percent of orphanages aren’t certified to handle foreign adoptions.

In other words, the government sets annual limits—quotas—on how many children foreigners can adopt.

For example, let’s say Qingwu Province has one thousand slots this year. Fifty of those might be allocated to a single large orphanage, which is also granted certain certifications and privileges that allow it to be rated as a ’premier orphanage’.

"After each adoption, the adoptive parents will usually make a donation of three thousand dollars, which is about twenty thousand Dongguo Coins."

"And foreigners are people, too."

"They have their own criteria when adopting a child. If they don’t find a suitable match, they obviously won’t go through with it."

"That’s when the large orphanage uses its connections to find smaller, lower-level orphanages. If a suitable child is found, they’re transferred to the large orphanage to be adopted by the foreign couple."

"Afterward, the large orphanage gives the entire three-thousand-dollar donation to the smaller one."

Lin Yue spoke slowly, laying out the logic of Zheng Tong’s ’profit’ model with perfect clarity.

The human traffickers make money, but not a fortune.

In 2002, some traffickers were selling children in bulk for as little as 800 to 1,500 Dongguo Coins apiece.

Zheng Tong exploits this system, buying a healthy child for a low price and then pocketing the high-value donation.

What’s that?

What if a child he buys isn’t chosen for adoption, and it becomes a sunk cost? It doesn’t matter.

A young, healthy child will naturally be adopted by another, local family, and their donation will offset the initial ’cost’.

Meanwhile, food and board are covered by government subsidies.

But whenever he manages to secure that three thousand dollars... that’s an instant net profit of at least twenty thousand.

Twenty thousand in the year 2002!

"Wait!"

Wang Chao suddenly realized something. His brow furrowed as he stroked his chin.

"Then... what’s in it for the large orphanage? They don’t keep any of the three thousand dollars? What do they get out of it!?"

Indeed.

It was an astute question.

Why would the large orphanage use up its limited quotas, spend its subsidies to care for the child, and not even keep the donation? What was the point of all that trouble?

"Performance reviews."

"There are three key criteria in the evaluation for becoming a ’premier orphanage,’ and one of them is the ’number of completed international adoptions.’"

Lin Yue shook her head and explained,

"The government gives premier orphanages fifty international adoption slots each year."

"If they use all of them, the high utilization rate earns them bonus points in their evaluations, helping them get rated as a ’Class-A Institute’ or a ’Model Orphanage.’"

"And vice versa."

She paused before adding, "As for why they seem so desperate... it’s similar to how research funding works for labs in academia."

"If you don’t use up your funding for the year,"

"then the administration will cut your budget next year. That’s why, when some universities have a surplus at the end of the year, they’ll find any way they can to spend it all, just to ensure their funding remains high for the following year."

Researchers are essentially forced to spend their entire budget.

For example.

"Say you’re researching something, and the university grants you ten million in funding. If you only use five million this year, then next year, the university will cut your budget to eight million, or maybe even seven."

"But you can’t guarantee you’ll only need five million every year. What happens when your expenses go over budget, but you don’t have the funds?"

"So, to prevent a budget cut, you have to spend that remaining five million by the end of the year, no matter what."

"That way, on paper, it looks like your lab spent at least ten million this year. Any budget cuts would supposedly halt your experiments, so you continue to receive ten million the next year."

"It’s the same with premier orphanages, but their performance is assessed even more directly."

"Your orphanage has fifty international adoption slots this year. If you can’t use them, you’ll be cut down to thirty next year."

"A sudden drop in your quota will trigger a series of chain reactions."

Lin Yue had laid out the whole affair of Zheng Tong buying children with perfect clarity.

And while the international adoption quota system would end in ’24, here in 2002, it was still very much in effect.

"And that’s why the premier orphanages don’t take a single cent of the donation."

"They just want to use up their slots, and the smaller orphanages need the money. It’s a mutually beneficial arrangement..."