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Interesting story. If I were there, I am sure I would shell out $50 faster than anybody else. I hope $1,900 request would trigger some kind of a block for me!
Maybe I'm jaded from my backpacking experience, but reading this the scam seems more than obvious, which makes it that much braver of the author to come forth and admit to it.

If these things are not shared, people will keep falling for it.

I think everyone on the tour group was jaded at the end!
> newly evolved Chinese tourism industry.

This sort of setup is far from new. I remember a similar sort of setup from a tour of Eastern Europe in the early 90's, as well as a recent tour in India.

Guard must always be up here in China and even more so in Beijing or Shanghai. Once, when I was a single man, I got of the plane in Beijing, checked into hotel, and came down for dinner. Two beautiful women immediately approached me, chatted me up, fed my ego, ask me for drinks down the road. Followed them to the bar, we ordered a $50 bottle of wine given exchange rates and price on the wall in chalkboard, and they guzzled that bottle while laying it on heavy with me. My budget was a few hundred bucks and they wanted to drink so it turned into three bottles of wine. Bottom line is when it was time to go home the bar gave me a $3000 USD bill. All the prices on the wall written on the chalkboard had extra zeros added. This is China.
You can experience something like this in any country. I recently have seen almost identical scenario when I was on the trip to Mexico.