The alleged boss of a multi-billion-dollar smuggling and bribery scam that badly tainted China's government went on trial on Friday after a 12-year diplomatic battle to avoid deportation from Canada.

The trial of Lai Changxing began in Xiamen city, in southeast China's Fujian province, where the alleged kingpin is accused of moving contraband reported to be worth between $6 billion and $10 billion before fleeing to Canada in 1999.

The case is hugely sensitive for China, which has vowed to rein in rampant corruption. State-run media have said it was the largest case of economic crime in the country since the Communists took over in 1949.

Known in China as the Yuanhua smuggling case after Lai's huge business conglomerate of the same name, the scandal married free-wheeling entrepreneurs with government officials in a heady mix of tax evasion and profit taking.

The 53-year-old Lai faces charges of running a criminal organisation that engaged in smuggling and bribery, the official Xinhua news agency said.

Xiamen intermediate court refused to comment on the case when contacted by AFP, and Xinhua did not say how long the case would last.

Trials in the case held over a decade ago brought down national-level military and police officials and a swarm of local functionaries and resulted in at least 14 death sentences.

Lai fled to Canada as the then-biggest graft scandal to hit the nation unravelled, arriving on a tourist visa with his then wife, two sons and a daughter.

He claimed the accusations against him were politically motivated and sought asylum, sparking a diplomatic tug-of-war that tested the countries' relations.

After Lai fled, over 1,000 investigators descended on Xiamen and launched an investigation that eventually convicted some 300 people linked to the smuggling ring, media reports at the time said.

Lai was deported to China in July last year after he waged a 12-year battle against repatriation that pitted Western ideas about human rights against Beijing's treatment of prisoners.

Canada, which does not have capital punishment, bans the return of prisoners to countries where they might be put to death, and for years the country's courts blocked his deportation out of fear he could be executed or tortured.

But China issued an unusual promise not to execute Lai if he is found guilty.

On Friday Canadian diplomats monitored the trial "pursuant to the assurances provided by the government of China" that Lai will not face the death penalty, a Canadian embassy spokesman in Beijing told AFP.

Lai allegedly smuggled luxury cars, cigarettes, oil and other contraband, paying off officials and entertaining them in a lavish private club known as the "red mansion".

At the time the People's Daily newspaper -- mouthpiece of the Communist Party -- said the club, with its sumptuous eateries, ballrooms, karaoke bars, saunas, cinemas and bedrooms, was where dozens of high-ranking officials "resigned themselves to degeneracy and became tools of Lai's group".

Lai was also known as a modern-day Robin Hood who would lavish money and goods on local communities near Xiamen where he grew up in poverty.

His trial was open to the public and numerous government officials and Lai family members attended, Xinhua said.