More than 96 per cent of the counterfeit money confiscated in recent years was printed using copies of original artwork produced by a forger in Shantou, Guangdong province.
Peng Daxiang, who is in his 70s, drew master artwork for the whole series of yuan bank notes.
He was jailed for life in 2013 after a major counterfeiting case, but copies of his drawings are still in use today, said Dong Yongxian, who is in charge of a laboratory that deals with fake money at the Ministry of Public Security.
A set of artwork for the 100-yuan note is worth more than 100,000 yuan (S$22,214), Dong said.
However, no fake bank notes carry all the anti-counterfeiting features found on real notes, Xinhua News Agency reported.
Counterfeiters buy paper, stamp in the foil security line, print layers of colors, cut the paper and press the fake money manually or with a machine to add a sculptural feel.
Technicians who can produce colors that are very close to those used in real notes are highly paid.
There were two major cases involving more than 223 million yuan of fake currency in Guangdong last year. Printing continued around the clock and consumed a metric ton of paper a week.
Dong's lab, founded in 2011, tests fake money, analyzes counterfeiting methods, provides evidence for criminal investigations, monitors trends and issues warnings.
Similar work is carried out at three work stations in Tianjin, Guangzhou in Guangdong, and Yunnan province, and there are 13 monitoring posts.
Lab workers analyse the fibers of the paper to judge whether it comes from coniferous wood or broad-leaved wood. In addition, they study the nonorganic elements and humidity of the paper to identify where it came from to help the police in their investigations.
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 organised.
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 per cent 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 offence later, which points to the need for heavier penalties, he added.