A policeman holds up a sheet used in making counterfeit money based on Peng Daxiang's artwork following a raid in Guangdong province on December 30. [JING GUOMIN/CHINA DAILY]

Counterfeiting requires a complete network and industrial chain. Gang members tend to be relatives of the leaders or come from the same village, and are highly organized.

Some even try to sell fake money online, a development that has led to heightened levels of online monitoring by the lab, Dong said.

Police across the country deal with about 1,000 cases involving fake money each year, and there have been signs recently that the problem is growing.

The amount of fake money confiscated has increased by more than 25 percent every year since 2012, and last year's total was 532 million yuan.

Thirty sets of new serial numbers on fake 100-yuan notes were reported last year. Pan Yuzong, director of the ministry's anti-counterfeit money division, said this indicates that new gangs are becoming involved.

The ministry plans to step up its efforts to tackle the counterfeiters, and will work with the People's Bank of China, the central bank, to carry out regional operations in key provinces.

More fake one-yuan, five-yuan and 10-yuan notes are being produced, and the ministry plans to focus its efforts on this area, as such small-denomination notes can be circulated more easily, Pan said.

As technology develops, some gangs are using simple printers, ink and paper to produce fake money.

Forged yuan notes have been confiscated by police in countries such as Thailand and Mongolia.

"If we do not intensify the crackdown and take more preventive measures, the internationalization of the currency will be affected," Pan said.

Thirty criminals in five provinces who were punished during a major campaign against fake money in 2009 committed the same offense later, which points to the need for heavier penalties, he added.