The Communist Party would never allow something like http://bit.do/Coinbase to operate within China although http://bit.do/Beijing is alive and kicking, and even with the markups, bitcoin is an order of magnitude less expensive, risky, and difficult when you compare it to "Smurfing."
I have this bad feeling this isn't going to end well for 99.9% of us humans.
2
This is what happens when PBOC is free to make as much money as they want, allowing its economy to grow and its citizens to spend. In accordance, its citizens move the money overseas (there are 101+ ways to circumvent the currency control and convert their RMB into foreign currencies), buying up assets and properties oversas, thereby squeezing citizens in those overseas countries, including Australia, Canada, Europe and yes, US.
4
The perfect example of state control of banks.
The US spends more for housing to pay for cheap Chinese goods, eh?
Among things to avoid the u.s. tax man, soon as the money gets here they purchase expensive jewlery, watches, high end cars. Then collect welfare and food stamps.No, I am not Donald just telling as it is.
3
This is what has driven the real estate market in Vancouver, Canada to unsustainable levels. Canadian Government is doing nothing to stop this and is not collecting any data. Young people are leaving the city in droves because it has become unaffordable.
6
Have any Vancouver area MPs or candidates even raised this issue? Has the mayor? The problem seems to be non-residents driving up prices. Canada admits around 30,000 Chinese nationals every year as permanent residents, and they should be able to buy any property they wish. How many new permanent residents bring in large sums of money needed to buy million dollar houses? I would guess not many, although there is no data to back this up. It's the non-residents who are parking their cash in Vancouver real estate, and the fix is simple - no foreign property ownership. If it turns out that it's the new permanent residents driving up property values to astronomical levels, then the immigration system is broken.
4
Actually there is data, which shows that foreign buyers make up about 2% of residential purchases in Vancouver.
Several Quebec cities are higher, and those prices remain well below Ontario and BC.
It is not foreigners who drive up Van property. It is irrational housing lust, the assumption that it will always go up, rock-bottom interest rates, and a CMHC that makes sure the only criteria for getting huge dollars on mortgage is breathing and having a pulse.
Several Quebec cities are higher, and those prices remain well below Ontario and BC.
It is not foreigners who drive up Van property. It is irrational housing lust, the assumption that it will always go up, rock-bottom interest rates, and a CMHC that makes sure the only criteria for getting huge dollars on mortgage is breathing and having a pulse.
1
No doubt both. I wonder if the money comes first and the immigrants come later?
THANK GOD -there are other countries, that might stomp us; thank GOD, there are other beliefs and ways of making sense of things. THANK GOD trying to fake out reality tends to lead to bankruptcy.
Not so long ago people were complaining that China was cheapening its currency to stimulate exports. Now they complain that it is overvalued.
1
The big bill is the 100 RMB note, you are a collector of bribes for a service you can render but you do not wish to create tractable bank accounts so you store the loot in stacks and bags in your spare bedrooms, and when very successful you purchase an empty house as needed. Government devalues from USD=6.2NCY to 6.5 and rising; ship the stuff out in cargo containers to a safe foreign bank.
Has little to do with the condition of the Chinese economy other than needs for exports in a sagging world economy and the hoped for result of falling import prices abroad.
Has little to do with the condition of the Chinese economy other than needs for exports in a sagging world economy and the hoped for result of falling import prices abroad.
1
Tough spot China is in right now. I think though that if their economy does crash which it potentially actually could happen with a very low chance could really just scratch our backs. Maybe I'm not so sure but our economy isn't really doing that good either.
2
I agree entirely with Shawn - the Chinese currency is UNDERVALUED relative to the US dollar. The argument the other way lacks basic fundamental reason. They have our money, we don't have theirs. Also, as Shawn points out, those reserves grow by the minute due to their trade surplus with the US. And the published 3+ trillion in reserves is likely on the low side, as Chinese companies and individuals are no longer required to immediately convert USD acquired via commerce into yuan via the Chinese government. The NYT is getting fed the same nonsense from Wall Street (short sellers) that the rest of the media blindly accepts as the truth. Be an independent thinker and take a logical approach.
5
Sydney, Vancouver, Toronto, London and New York welcome these displaced Chinese. Too bad they welcome mat for others is not equally rolled out.
Perhaps the welcome mat is not rolled out for those who can not pay their own way and wind up on welfare at the taxpayers expense.
2
Does this mean they will be selling their aircraft carrier?
2
If China runs such a trade surplus, what is driving down demand for RMB?
1
you can't pay anything with renmimbi
Great reserve currency, isn't it?
Don't worry the Donald will take care of it
7
I wonder what would happen if the outflow is freely allowed. Then only we know the real situation in that country. I would not invest in any country that is not transparent. I agree with Sanders, I don't support Kissinger.
3
I think the writer is drawing premature conclusions!
China is extending its economic power!
Remember who wants to buy the Chicago stock exchange!!!!
Who do you think that really benefits....?
China is extending its economic power!
Remember who wants to buy the Chicago stock exchange!!!!
Who do you think that really benefits....?
2
I thought China was the savior, that it could do no wrong, that it would soon surpass the U.S. economy, that it was creating a new world order, that the renminbi would overtake the dollar, that the West was in decline, that we were imperialists, and that we should respect their right to abuse dissidents, minorities, and women?
Now that their economy is in free fall, many are quietly eating crow.
Now that their economy is in free fall, many are quietly eating crow.
6
I am old enough to remember when it was JAPAN that was going to surpass the US economy -- drink our milkshake -- create a new world order -- the yen would overtake the dollar -- the west was in decline -- and oh yeah, we didn't save enough money, not like those super-thrifty Japanese workaholics!
How'd that turn out? The Japanese economic "miracle" turned out to be smoke and mirrors. The idea of Japan taking over today seems laughable.
I think there is something in our national psyches PLUS something in liberal reporters and journalists that WANTS to fail -- that feels inferior, and thinks punishment and humiliation are in order. This started in the 70s, as far as I can tell, with the oil embargo and then the drastic run-up in inflation that followed and the Iranian hostage situation. It was capped by Carter and his "malaise" speech. But it continued in some form or another, into the 21st century.
If China falls, what oh what will be obsess on then?
How'd that turn out? The Japanese economic "miracle" turned out to be smoke and mirrors. The idea of Japan taking over today seems laughable.
I think there is something in our national psyches PLUS something in liberal reporters and journalists that WANTS to fail -- that feels inferior, and thinks punishment and humiliation are in order. This started in the 70s, as far as I can tell, with the oil embargo and then the drastic run-up in inflation that followed and the Iranian hostage situation. It was capped by Carter and his "malaise" speech. But it continued in some form or another, into the 21st century.
If China falls, what oh what will be obsess on then?
5
Yea, but for the Japanese, Japan is still a better place to live and be - they have built a great country for themselves. European countries also have a bette quality of live and longevity. We can achieve that and we were on our way to achieving that until the election of GWB but it started with Reagan really where we started taking two steps forward and one step back (with GWB it was three steps back but his father did raise taxes).
5
Europe is stagnant with unemployment rates in some of the 'good' countries at 10% and 30%* in others. They innovate very little, invent virtually nothing, have low productivity, next to no growth, far more expensive lives while at the same time having access to fewer good.
And yep, progressives are hoping to move us there too. The only question is why?
And yep, progressives are hoping to move us there too. The only question is why?
At least, it seems, no one is really surprised at this point.
I certainly look forward to the economic analysis of how this all plays out. Especial how the previously touted unassailable dollar reserve positon holds out for the Chinese government.
Irrational expectations of unsustainable economic growth fueled by speculation knows no home, respects no economic theory, and obviously presents the financial world with an intractable learning problem.
I wonder how the American middle and lower class citizen/taxpayer will be used by our government to bail the Chinese out of this one?
Michael Bain
Glorieta, New Mexico
I certainly look forward to the economic analysis of how this all plays out. Especial how the previously touted unassailable dollar reserve positon holds out for the Chinese government.
Irrational expectations of unsustainable economic growth fueled by speculation knows no home, respects no economic theory, and obviously presents the financial world with an intractable learning problem.
I wonder how the American middle and lower class citizen/taxpayer will be used by our government to bail the Chinese out of this one?
Michael Bain
Glorieta, New Mexico
4
These articles seem to misunderstand what has happened in the past 20 years in the global market. They waste enormous time and energy analyzing what it basically a ball game call-by-call missing out on the larger picture.
The reality is that China and the U.S. need each other to survive. China produces all this stuff and Americans buy it. The Chinese have all these personal savings and lends it to the U.S. in the form of its forex sovereign fund.
This imbalance is the problem. Too much savings is piled up on one side and too much spending and debt is piled up on the other side. The reality is that the trillions (we are truly talking 12 zeroes in amounts here) have been off-shored by American companies. This accounts for the huge imbalances. If those savings from productivity gains were kept onshore we would not have our huge federal and trade deficits.
This imbalance is hampering the American economic recovery. It also accounts for the volatile market situations that seem to come up once a decade.
Only idiots will keep doing the same things and expect a different outcome.
The reality is that China and the U.S. need each other to survive. China produces all this stuff and Americans buy it. The Chinese have all these personal savings and lends it to the U.S. in the form of its forex sovereign fund.
This imbalance is the problem. Too much savings is piled up on one side and too much spending and debt is piled up on the other side. The reality is that the trillions (we are truly talking 12 zeroes in amounts here) have been off-shored by American companies. This accounts for the huge imbalances. If those savings from productivity gains were kept onshore we would not have our huge federal and trade deficits.
This imbalance is hampering the American economic recovery. It also accounts for the volatile market situations that seem to come up once a decade.
Only idiots will keep doing the same things and expect a different outcome.
4
"The Chinese have all these personal savings and lends it to the U.S. in the form of its forex sovereign fund.”
The US does NOT borrow from China. The US issues the USD. Why would it need to “borrow” its own money from China?
When Walmart or Best Buy buy things from China, they wire USD to China’s checking account at the Fed. USD cannot leave the US banking system *by law*. So China has a few choices.
(1) Buy Yuan on the open market and wire it home.
(2) Leave it in checking at the Fed and earn a % of one basis point in interest (since 2008), basically zilch.
(3) Buy American goods.
(4) Earn interest by instructing the Fed to move their money from their checking account at the Fed to their savings account at the Fed, and buy a ‘CD’. That interest-bearing ‘US govt CD’ is called a treasury security, and comes in three maturity flavors: Bill, Notes, and Bonds.
As of Nov 2015, China parks $1264.5 billion--or $1.3 trillion--in US treasury securities. Up from $1250.4 billion a year before. China holds the most USD of any country in the world. http://ticdata.treasury.gov/Publish/mfh.txt. This has remained roughly the same since 2009.
The reason we have huge trade deficits is because we are the reserve currency; other countries want to net save in USD. Only way they can get USD is to sell us stuff; can’t counterfeit them. Any country that wants to be the reserve currency must be willing to have trade deficits.
The US does NOT borrow from China. The US issues the USD. Why would it need to “borrow” its own money from China?
When Walmart or Best Buy buy things from China, they wire USD to China’s checking account at the Fed. USD cannot leave the US banking system *by law*. So China has a few choices.
(1) Buy Yuan on the open market and wire it home.
(2) Leave it in checking at the Fed and earn a % of one basis point in interest (since 2008), basically zilch.
(3) Buy American goods.
(4) Earn interest by instructing the Fed to move their money from their checking account at the Fed to their savings account at the Fed, and buy a ‘CD’. That interest-bearing ‘US govt CD’ is called a treasury security, and comes in three maturity flavors: Bill, Notes, and Bonds.
As of Nov 2015, China parks $1264.5 billion--or $1.3 trillion--in US treasury securities. Up from $1250.4 billion a year before. China holds the most USD of any country in the world. http://ticdata.treasury.gov/Publish/mfh.txt. This has remained roughly the same since 2009.
The reason we have huge trade deficits is because we are the reserve currency; other countries want to net save in USD. Only way they can get USD is to sell us stuff; can’t counterfeit them. Any country that wants to be the reserve currency must be willing to have trade deficits.
4
I thought China has been quietly selling its US bills, notes and bonds....
The story of the current 'reverse migration' of wealth from China begins with its 'forward migration' three decades ago when American Corporates began transferring vast amount of US money to purchase goods there to sell here. Large expansion of manufacturing occurred in China, funded by US investment firms (Wall Street), with help from a supportive Chinese Government. Cascading events occurred - huge losses of manufacturing jobs in the US, concomitant gains in China, fall in U.S. wages across most sectors, esp. blue-collar wages, and finally the diminishing purchasing power of U.S. consumer. Now it is back a full circle as the US consumer power, once an engine of growth in China, is no longer able to drive that growth train, resulting in the same shrinking of manufacturing in China as started in the US decades ago. Weakening Chinese economy (and currency) is the cause of migration of money back to US and elsewhere for purchase of real assets. Picture is now clear how American wealth got transferred, invisible at the time to average citizen, mesmerized in the enjoy of cheap foreign goods. New owners now own highly visible American assets. In the late 1980s, the Japanese similarly purchased assets here. But the scale is larger this time. This transfer will, as always, end in some new equilibrium between participants. The Chinese currency will reach a lower trading range and the out-migration will diminish. 'Globalization' is actually making itself visible in this form.
3
Let's hurry and replace the dollar with the renminbi as the world currency before its to late!
1
What do you think is fueling the real estate boom in NYC?
2
NYC, but not just NYC -- look at the big coastal California cities, Seattle, Portland and parts of Florida (the nice parts, on the oceanfront).
1
Over the past couple of decades, the Chinese government has adopted a number of measures that have made it easier for its citizens to invest directly and indirectly overseas. This is one of the standard measures by which countries with current or trade account surpluses would do to avoid having to revalue its currency upward by encouraging capital outflow.
As for money that are moving from China into the US real estate market, most of it is really the result of China's phenomenal economic growth in the past decade, and it is just as likely the money channeled out is money that businesses and individuals made from the Chinese stock and real estate market, than bribes and other payment money to corrupt officials. The psychology behind the Chinese purchase of real estate is similar to Manhattanite accustomed to paying $2 Million for a one room apartment coming to the Midwest and find that they can buy a mansion for under $500 thousand or less.
As for money that are moving from China into the US real estate market, most of it is really the result of China's phenomenal economic growth in the past decade, and it is just as likely the money channeled out is money that businesses and individuals made from the Chinese stock and real estate market, than bribes and other payment money to corrupt officials. The psychology behind the Chinese purchase of real estate is similar to Manhattanite accustomed to paying $2 Million for a one room apartment coming to the Midwest and find that they can buy a mansion for under $500 thousand or less.
1
Just as in the U.S., the wealthy have no interest in patriotism...only protecting their wealth. Welcome to the new world.
12
And they do not come here to do our laundry or build our rail roads...
3
They built our railroads, they did our laundry, they cooked and delivered, ran restaurants. They now fill our best schools... and are limited by quota. They have reached in science, law, medicine, business, education ... and politics. They dominate by will and intellect. They work for what they get... and do not ask for assistance. They are not known for trying to improve the politics of China... but they do understand things over there. They understand.
In the Philippines, in South America, in Africa, in the west, they are rising and proving their merit.
The Chinese expats are doing well. Those that remain home will wish they'd led the exodus.
For China is in a spiral. It is not pretty... but the outcome is clear.
When they flee with their capital, they take everyone with them.
They know what they are doing.
Want to make this country great again? Okay. Ask them to come and learn what we can do about it...
It starts with work done, and desire. We no longer work that well, and some say desire has failed us.
In the Philippines, in South America, in Africa, in the west, they are rising and proving their merit.
The Chinese expats are doing well. Those that remain home will wish they'd led the exodus.
For China is in a spiral. It is not pretty... but the outcome is clear.
When they flee with their capital, they take everyone with them.
They know what they are doing.
Want to make this country great again? Okay. Ask them to come and learn what we can do about it...
It starts with work done, and desire. We no longer work that well, and some say desire has failed us.
Dude, the Chinese who built our railroads, did our laundry and more importantly, brought us Chinese food (YUM!) were the poorest of the poor.
This invasion is their corrupt, wealthy elite. Totally different.
This invasion is their corrupt, wealthy elite. Totally different.
12
Not if you follow the Sanders crew.
Please read the article again. It is referring to wealthy mainland Chinese, not the first-generation immigrants of 100 years ago.
2
Hyper capitalism fueled by the corporate and investor class greed has deminished everyone's faith in currencies. A $1 isn't a $1 in anyone's world, but most especially the USA's. All of the professional class, the working class the working poor work longer for less than at anytime in modern history. That and fraudulently packaged "securities" of no real value peddled by hedge fund managers and investors have made world wide economies a delusion that has hurt us all.
5
Where, pray tell, are the Chinese going to invest, other than China, that might offer more robust returns? New York City penthouses? London townhouses?
Yeah, that's been underway for some time now. All it will do is what it has done--push prices to the stratosphere where they will be, until it becomes clear the prices aren't supported by the value.
China, more than anything, is why developed economic systems in the West did not fall off a cliff in 2008/9. The current troubles, which are only in the initial stages, won't be so easily resolved. Not without a China building empty office buildings and condos. This time is different, but not in the good way the phrase is usually intended to describe.
Yeah, that's been underway for some time now. All it will do is what it has done--push prices to the stratosphere where they will be, until it becomes clear the prices aren't supported by the value.
China, more than anything, is why developed economic systems in the West did not fall off a cliff in 2008/9. The current troubles, which are only in the initial stages, won't be so easily resolved. Not without a China building empty office buildings and condos. This time is different, but not in the good way the phrase is usually intended to describe.
One only needs to look at Vancouver as a case study. Two articles from CBC:
http://www.cbc.ca/news/canada/british-columbia/metro-vancouver-home-pric...
http://www.cbc.ca/news/canada/british-columbia/richmond-condo-human-righ...
My suspicion is that much of the money is tied to the CPC members and their families, and is dirty money to begin with. This isn't immigration of old, where Chinese immigrants strived to learn English and their children were brought up on Canadian values. I don't see it happening with new immigrants - maybe it's the new age of globalism that allows it to never lose touch with your country of origin and become a citizen of convenience in those countries that allow it (US, Canada, etc).
http://www.cbc.ca/news/canada/british-columbia/metro-vancouver-home-pric...
http://www.cbc.ca/news/canada/british-columbia/richmond-condo-human-righ...
My suspicion is that much of the money is tied to the CPC members and their families, and is dirty money to begin with. This isn't immigration of old, where Chinese immigrants strived to learn English and their children were brought up on Canadian values. I don't see it happening with new immigrants - maybe it's the new age of globalism that allows it to never lose touch with your country of origin and become a citizen of convenience in those countries that allow it (US, Canada, etc).
9
For most of the past 2200 years, China has been a technological scientific industrial socioeconomic political educational superpower. China achieved this in isolation from the Western nations who slumbered in the Dark Ages between the collapse of the Classical Western world and the beginning of the Renaissance. China chose not to become a world colonial or military power.
With a population of 1.3 billion people about 18% of the human race is Chinese. The ethnic Han are 92% of Chinese with 55 different ethnic groups making up the remaining 8%. Although China has the second largest economy based upon nominal GDP, with 4x as many people as # 1 America and 10x as many citizens as #3 Japan on a per capita economic basis, China ranks in 80th place near Bulgaria. Most of the human beings pulled out of poverty into the middle class over the last few decades have been Chinese. Due to the one-child policy and a cultural preference for males, China is aging and shrinking with a gender imbalance. And the Chinese environment is deteriorating. Based upon Chinese figures no nation suffered more casualties during World War II- the Chinese People's War Against Japanese Aggression- than China.
With a population of 1.3 billion people about 18% of the human race is Chinese. The ethnic Han are 92% of Chinese with 55 different ethnic groups making up the remaining 8%. Although China has the second largest economy based upon nominal GDP, with 4x as many people as # 1 America and 10x as many citizens as #3 Japan on a per capita economic basis, China ranks in 80th place near Bulgaria. Most of the human beings pulled out of poverty into the middle class over the last few decades have been Chinese. Due to the one-child policy and a cultural preference for males, China is aging and shrinking with a gender imbalance. And the Chinese environment is deteriorating. Based upon Chinese figures no nation suffered more casualties during World War II- the Chinese People's War Against Japanese Aggression- than China.
3
And yet they manage to be miserably untrustworthy partners in business. Cannot ask them to do a job; they'd rather tell you what they think you want to hear, than actually figure out how to do the work, do it and explain what they did and why they did it.
So, any lessons here for those who want a government-directed economy, including a government-managed investment system?
2
We already have a government-directed economy ... the oligarchs call all the shots including transferring all our jobs to China and fill the rest in America with H-B visas. The oligarchs bought congress which passed their treasonous trade agreements that caused the biggest income equality in our history. Unfettered capitalism gave hedge fund managers a green light to gamble with American citizen's life savings and our nation's economic security ! No more ... Enough ! Bernie is a democratic socialist, meaning we invest in and build our infrastructure, we invest in America's kid's education, and not keep our citizens from healthcare because they're not rich. Any sane person knows you shouldn't base healthcare on how rich someone is .... it's not civilized in any respect.
5
Did any of the leveraged buyout barons, CFOs, or CEOs in the Western Democracies actually do any in-depth studies as to whether it was in their nation's economic security interests to turn over their manufacturing engines to a Communist kleptocracy --- before they shipped their Communist partners the lock, stock, and barrel?
14
Amen !
2
This article about the exodus of money from China confirms to me what I have thought for a long time. Anyone who invests in a Chinese public company is, in most cases, simply rolling the dice. Until the accounting firm watch dog (the Public Company Accounting Oversight Board) is allowed to inspect the work of accounting firms doing audits in China, you should not rely on financial reports of Chinese companies. As I have always held during my 35 years of auditing, follow the money and you will find the truth.
11
The author of this article has provided a succinct and accurate article about China's currency problems. Congratulations.
I would only add that China's central bank was or very well may still be buying forward dollar 3-month swaps when they sell their reserves and buy yuan. With that said and because the eurodollar trade is tighening across the globe, it will only exacerbate the yuan depreciation and make the dollar more expensive, thus making all commodites cheaper, the yuan cheaper, and the inevitable cascade of bankruptcies for Chinese exporters of steel, cement, etc and countries dependent upon commodities for their exports.
I would only add that China's central bank was or very well may still be buying forward dollar 3-month swaps when they sell their reserves and buy yuan. With that said and because the eurodollar trade is tighening across the globe, it will only exacerbate the yuan depreciation and make the dollar more expensive, thus making all commodites cheaper, the yuan cheaper, and the inevitable cascade of bankruptcies for Chinese exporters of steel, cement, etc and countries dependent upon commodities for their exports.
5
Money invested out of China into US real-estate for example, has been going on for many years. So it's not all corrupt money. As a matter of fact, many ordinary Chinese send their kids to America to study and, after graduating, they would stay. The parents finance the purchase of a house. This happens all the time. This way parents can come and visit their kids for years to come. This is a good thing. There has been so much negative reporting on China by the NYT.
5
I'll take a wild guess and say this is the same Marc Turcotte in Keller TX who is a Realtor and just is loving that Chinese money that's been jacking up prices (and Realtor commissions.) Whether it's clean money or not, no Realtor is going to be sniffing that dog. And what is the legal mechanism for Chinese students in the US, after graduating, to be allowed to stay here. Isn't their student visa up when they graduate? It's quite nice that they get to stay, live and work in the US, plus have the convenience of having their own home so their parents can come for a nice visit "...for years to come." Here in Palo Alto, besides jacking up home prices incredibly, once established, successful Chinese tech workers often help their non-English speaking parents apply for subsidized senior housing without spending hardly a penny of their own money to support them. The parents came and visited their children here, liked it so much, they figured out a tax-payer supported way to stay for the rest of their lives. Pretty nifty. Let's call a spade a spade.
7
@SG: thank you for pointing out that realtors are benefitting from this like CRAZY -- as they did the whole housing bubble of the early 00s. It's pure profit in their pockets and who cares if you sell your country and your fellow citizens out in the process?
3
At least this time it's not the mortgage brokers: cash buyers need no mortgages. Ken DeLeon Realty in Palo Alto has perfected the sell-off of Silicon Valley to the Chinese: custom-bus tours of "desireable" properties and neighborhoods; bi-lingual "specialists" to help you spend your imported loot.
4
More than 50+% of the money moved from China to US involves corruptions. Chinese president Xi Jinping is digging out corrupted officials and business person right now. Despite so many have flee the country with their dirty money, Chinese government has shown results to take them back from other countries through legal channels to China for trials. It works on almost everywhere except in US due to the fact we do not have a treaty to expedite the criminals to China. We should take this opportunity to weed out the "bad" money from the real "good" money for investment.
6
Recall just a couple of years ago fear was the yuan could ultimately replace the dollar as the world's reserve currency? How quickly things change. Yuan has been exposed as phony due to a central government run economy. The dollar will remain king so long as capitalism thrives here.
2
First of all, the Chinese are moving dollars out of the country not RMB (Chinese money); also euros and yen. These currencies are the collateral for RMB lent into existence by both the central bank as well as private lenders: the 'Shadow Bank' loan sharks.
The dollars are borrowed by Chinese manufacturers from Wall Street (by way of their US customers buying Chinese 'goods'). Now that the Americans are buying less Chinese-made junk with borrowed dollars, the wealthy in Shanghai, Beijing and elsewhere are spiriting the borrowed dollars back to the US, leaving the less-wealthy Chinese to hold the bag. How so? As the collateral flees China the worth of the RMB declines. At some point the RMB becomes scrap paper as there are few if any dollars available in China to exchange for it. This leaves as collateral some rusted used cars, vacant (useless) towers and potholed Chinese freeways from nowhere to nowhere.
Sadly for the Chinese there is no US collateral for dollars, either ... other than some rusted used cars, (useless) suburban tract houses and potholed freeways from nowhere to nowhere.
We've bought some (useless, it turns out) time with borrowed dollars, etc. and have outwitted ourselves in the process.
The dollars are borrowed by Chinese manufacturers from Wall Street (by way of their US customers buying Chinese 'goods'). Now that the Americans are buying less Chinese-made junk with borrowed dollars, the wealthy in Shanghai, Beijing and elsewhere are spiriting the borrowed dollars back to the US, leaving the less-wealthy Chinese to hold the bag. How so? As the collateral flees China the worth of the RMB declines. At some point the RMB becomes scrap paper as there are few if any dollars available in China to exchange for it. This leaves as collateral some rusted used cars, vacant (useless) towers and potholed Chinese freeways from nowhere to nowhere.
Sadly for the Chinese there is no US collateral for dollars, either ... other than some rusted used cars, (useless) suburban tract houses and potholed freeways from nowhere to nowhere.
We've bought some (useless, it turns out) time with borrowed dollars, etc. and have outwitted ourselves in the process.
If one wants to get a glimpse of what some west coast cities may look like in the future, visit Hong-couver, British Columbia. There are ALOT of people in China and guess where they'd all like to live? Not in China, where you can't breathe the air in most cities. Since when is this exodus to North America acceptable? Can all of the planet's rich just come and set up camp here, no questions asked?
Or how about that round about way of securing your future citizenship by visiting when pregnant and giving birth on American soil? We really must re-consider that one. Overstaying their visitor/student visas and then claiming political asylum or religious persecution is very popular too. Who knew there were so many Catholics/Christians within China?
I don't think these international border crashers have one whit about being American/Canadian. They're ALL about their money and worship it.
This crass, nouveau riche, foul effluence flowing here is mostly made up of thieves. And it is repugnant and materialistic beyond belief. They are not loyal to their host countries or anyone for that matter. Let's not make the same mistakes and allow SF and Seattle, et al to become Vancouver. Or is it too late?
America and China, a greed match made in shored up, artificial Renminbi Heaven. We may deeply regret this someday.
Or how about that round about way of securing your future citizenship by visiting when pregnant and giving birth on American soil? We really must re-consider that one. Overstaying their visitor/student visas and then claiming political asylum or religious persecution is very popular too. Who knew there were so many Catholics/Christians within China?
I don't think these international border crashers have one whit about being American/Canadian. They're ALL about their money and worship it.
This crass, nouveau riche, foul effluence flowing here is mostly made up of thieves. And it is repugnant and materialistic beyond belief. They are not loyal to their host countries or anyone for that matter. Let's not make the same mistakes and allow SF and Seattle, et al to become Vancouver. Or is it too late?
America and China, a greed match made in shored up, artificial Renminbi Heaven. We may deeply regret this someday.
14
Thank you, thank you! You nailed it. I do not know why the governments do not put a stop to this. The longer they wait, it only invites people like Trump to offer their solution. I also do not know why Trump has not yet mentioned the Asian invasion of the West Coast, including the hoardes of unnecessary H1-B workers.
By the way, it is too late for the Bay Area and Los Angeles.
By the way, it is too late for the Bay Area and Los Angeles.
6
It only requires 640,000 Chinese to move $5 million each out of China to wipe out $3.2 trillion in foreign currency reserves. Seems to me China is in big trouble and will be forced to dramatically devalue its currency.
3
Or . . . if all 80 million communist members each moved $40,000 out of the China, China's $3.2 trillion in foreign currency reserves would be wiped out. It doesn't seem like China's currency stands a chance. Buckle up.
2
It is hard to understand why the Chinese are recruiting 140 relatives and friends when they can just buy gold locally...
1
The combined value of USA real estate is around 25 trillion dollars. In context, the amount of Chinese investment is tiny. While Chinese investment may influence a couple of regional markets, it will have little or no impact on USA real estate overall. As always, NY Times "progressive" reader base, is ready to impose government enforced controls and regulations at the first sign of something they fear might happen. No perspective. Ever.
3
"As always, NY Times "progressive" reader base, is ready to impose government enforced controls and regulations at the first sign of something they fear might happen"
The government worshiping "progressives" can never have too much government controls and regulations or too many useless, parasitic, bureaucratic vermin to enforce them. In their ideal world everyone would work for their great god government, just like in the old USSR, and we all know how well that worked out.
The government worshiping "progressives" can never have too much government controls and regulations or too many useless, parasitic, bureaucratic vermin to enforce them. In their ideal world everyone would work for their great god government, just like in the old USSR, and we all know how well that worked out.
2
Not only are many well-off Chinese getting their money out of there, they're getting THEMSELVES - and their families - out as well, while the getting is good. Out of an economy - and a nearly totalitarian political system - that can charitably be described as a 'house of cards'. What else can you say about a country full of recently-built, unoccupied 'ghost cities' into which million of hard-working people sank their life savings, because over there you have to have the 'right' connections to even be ALLOWED to invest in any real, viable enterprises?
3
The Chinese leadership should focus on the long-term perspective of the economy, if it wants to regain investors' confidence. The strength of its currency depends very much on how sustainable the country's economy is.
This requires policies to restructure and rebalance the economy.
Right now the authorities seem perplexed and run out of options. The more short-term measures taken, the more uncertainty they trigger, especially in the absence of perfect information.
This requires policies to restructure and rebalance the economy.
Right now the authorities seem perplexed and run out of options. The more short-term measures taken, the more uncertainty they trigger, especially in the absence of perfect information.
2
The Chinese have destroyed the real estate market in Los Angeles. Why won't our political representatives do something to protect us? It's not just Isis that's a threat to our lives.
23
The politicians were the first to be sold.
Let's hope the Chinese can't call the loans they made to the US, anytime soon. If they need cash, watch out.
2
What a shock? No, they are buying Colorado now. They own mostly everywhere else already.
5
Deflation is a four letter word for most economists...
And journalists prefer "lack of inflation"
Russia, China, Japan, others... are experiencing deflation...
It's no secret.
But it's intractable...
1938 saw what this means...
War was one of the results...
And journalists prefer "lack of inflation"
Russia, China, Japan, others... are experiencing deflation...
It's no secret.
But it's intractable...
1938 saw what this means...
War was one of the results...
4
Massive real estate purchases by Chinese not only focus on the high value markets in Manhattan, San Francisco or Vancouver, BC, but for years happened in other markets too. The "naked businessmen" park their families in the affluent suburbs of Connecticut, the North Carolina Research Triangle and other areas offering safety and great school systems for their kids. Rows and rows of town houses are owned by Chinese landlords residing overseas, and more and more apartment complex developments are sprouting up developed with funds from Chinese investors running shell companies and LLCs so they can transfer large amounts of currency out of China. Home prices have inflated so much that middle class Americans are priced out of these second tier area, leaving them condemned to rent.
16
No surprise here and brings the explosion in NY City and LA real estate into focus. Which brings us to this paradox. Our precious corporate executives and so call entrepreneurs complain about taxes and regulation. They say they will go off shore if they are burdened more. Got a place for you to go, China. You can pollute all you want, cheat, abuse labor and pretty mush steal people blind. But when you wanna get out you are gonna be strapping cash to your trophy wife and mistresses to get it out. Long live the USA and our tax and regulatory system, and don't let the door hit you in the butt on the way out Mr. Crony Capitalism.
7
The author is actually talking about two different things.
One thing is the stock bubble that inflated in Shanghai and burst last year. Data shows that, even with all the devaluation that happened, it still isn't bellow the pre-bubble era. In other words, we are talking about a bubble that is busting, not a full-fledged collapse such as the one that happened with the American private financial system in 2006-2008.
The other thing is capital flight that inevitably happens when a fiat currency not named Dollar (which is the international reserve fiat currency) is devalued at an accelerated rhythm, such as what happened with the Renminbi. The Chinese capitalist elite then offshores it's fictitious capital in tax heavens, in other obscure financial commodities and SWAGs. One thing is certain: this capital flight from China is not coming back to the USA real economy, so this is not good news for Chinaphobic Americans that still dream about the second coming of manufacture to their country.
One thing is the stock bubble that inflated in Shanghai and burst last year. Data shows that, even with all the devaluation that happened, it still isn't bellow the pre-bubble era. In other words, we are talking about a bubble that is busting, not a full-fledged collapse such as the one that happened with the American private financial system in 2006-2008.
The other thing is capital flight that inevitably happens when a fiat currency not named Dollar (which is the international reserve fiat currency) is devalued at an accelerated rhythm, such as what happened with the Renminbi. The Chinese capitalist elite then offshores it's fictitious capital in tax heavens, in other obscure financial commodities and SWAGs. One thing is certain: this capital flight from China is not coming back to the USA real economy, so this is not good news for Chinaphobic Americans that still dream about the second coming of manufacture to their country.
Many of the well connected Chinese investors moves their money out many years ago, now they are panicking. The families of Chinese real estate developer Zhang Xin invested in NYC real estate 2 years ago at 767 Fifth Avenue. the wife worked for Goldman Sachs. It is clear that many have have shifted their money out of China already just in case their assets are seized in China. Better to be diversified. Many want the safety of the Western legal system to retain their wealth for in China if the test towards capitalism falls, the Chinese government may find it necessary to outlaw private property. Most likely that is an exaggeration, however diversification insures stability for the wealthy in China, for the government is just not trusted.
6
The inherent contradictions of a communist-run capitalist economy are beginning to show. Gordon Chang was perhaps wrong in his timing, but correct in predicting a coming collapse of China. You can't remain a big player in the global economy when your country is run by a bunch of tyrants and economic know-nothings whose main goals are maintaining political control and lining their own pockets. It will not be 1989 and the (mostly) peaceful collapse of the Soviet Union, but more likely an economic tailspin leading to something like the Arab Spring, with the state repressing the people further, ending in a military takeover or the breakup of China into several states, as has happened before in Chinese history.
3
Time and again, these stories fail to present facts from the other side (i.e. China). All we read/hear about is a myriad of indicators that only confuse readers about the state of Chinese economy. I am tired of this forced imagery because it is not built on facts and hence not believable.
At a minimum, I would send my money out of China first and emigrate later, if the alternative was to raise kids in a country where you can't breathe the air.
There is some irony here. One of the strengths of the Chinese culture, and the people of Chinese origin, is that the diaspora has sent money home for investment when able. Other diaspora may have exhibited something similar, but the Chinese have stood alone in this regard. The love of taking risk is something I have marveled at, often enviously.
Now this exodus. This was to be expected. All this money has illegitimate roots; it has accumulated in China as a result of corruption and hurting ordinary Chinese. The money is vast, it is connected to the Communist Party, it is connected to the Chinese military. When it gets overseas, it will be invested in shady enterprises, and used to corrupt an already corrupt nation such as ours.
I will let the Chinese worry about whether or not this is a good or bad thing for China; this is not a good thing for the US. Among other things, the money will spike real estate prices - and make it difficult for ordinary citizens to own property because prices go beyond the pale (see NY city as Exhibit A, London Town as Exhibit B). It will go toward purchase of businesses that really should not have foreign ownership (such as law practices, dentist practices, medical practices, insurance businesses, high-tech manufacturing).
I would not worry about it if we were a clean, incorruptible nation. But we are not (maybe less corrupt than Nigeria and Afghanistan, but more corrupt than Denmark, Canada and Norway).
Therein lies the problem.
Now this exodus. This was to be expected. All this money has illegitimate roots; it has accumulated in China as a result of corruption and hurting ordinary Chinese. The money is vast, it is connected to the Communist Party, it is connected to the Chinese military. When it gets overseas, it will be invested in shady enterprises, and used to corrupt an already corrupt nation such as ours.
I will let the Chinese worry about whether or not this is a good or bad thing for China; this is not a good thing for the US. Among other things, the money will spike real estate prices - and make it difficult for ordinary citizens to own property because prices go beyond the pale (see NY city as Exhibit A, London Town as Exhibit B). It will go toward purchase of businesses that really should not have foreign ownership (such as law practices, dentist practices, medical practices, insurance businesses, high-tech manufacturing).
I would not worry about it if we were a clean, incorruptible nation. But we are not (maybe less corrupt than Nigeria and Afghanistan, but more corrupt than Denmark, Canada and Norway).
Therein lies the problem.
47
If the economy was suffering from accumulated chronic underinvestment, shifting income from the non-rich to the rich would make sense. Underinvestment would mean there was a shortage of shopping centers, hotels, housing and factories were operating at 100% of capacity but still not able to produce as many cars and other goods as people needed. It might not seem fair, but the quickest way to build up capital is to take income away from the middle class who have a high propensity to consume and give to the rich who have a propensity to save (and invest). Except for periods in the 1950s and 1960s and possibly the 1990’s when tax rates on the rich just happened to be high enough to prevent overinvestment, the economy has generally suffered from periodic overinvestment cycles.
Since 1969 there has been a tremendous shift in the tax burdens away from the rich on onto the middle class. Corporate income tax receipts, whose incidence falls entirely on the owners of corporations, were 4% of GDP then and are now less than 1%. During that same period, payroll tax rates as percent of GDP have increased dramatically. The overinvestment problem caused by the reduction in taxes on the wealthy is exacerbated by the increased tax burden on the middle class. While overinvestment creates more factories, housing and shopping centers; higher payroll taxes reduces the purchasing power of middle-class consumers. ..."
http://seekingalpha.com/article/1543642
Since 1969 there has been a tremendous shift in the tax burdens away from the rich on onto the middle class. Corporate income tax receipts, whose incidence falls entirely on the owners of corporations, were 4% of GDP then and are now less than 1%. During that same period, payroll tax rates as percent of GDP have increased dramatically. The overinvestment problem caused by the reduction in taxes on the wealthy is exacerbated by the increased tax burden on the middle class. While overinvestment creates more factories, housing and shopping centers; higher payroll taxes reduces the purchasing power of middle-class consumers. ..."
http://seekingalpha.com/article/1543642
2
It has already spiked real estate prices, and it is only going to get worse. When people wonder if the Bay Area will have another real estate crash like after the dot com period, I always say NO. And this is why. Dirty money from China and Russia and elsewhere. I was told (I can't verify) that 60% of the real estate sales in my county last year were to foreigners. Since some areas would not be of interest to them, it means the ultra wealthy areas are being bought almost exclusively by foreigners.
It is pushing the middle class and lower classes out to the edges here, and the edges are getting pretty far out. That, or leave the Bay Area - and leave your source of employment.
It is pushing the middle class and lower classes out to the edges here, and the edges are getting pretty far out. That, or leave the Bay Area - and leave your source of employment.
5
RMB could go lower but investing long term with a short view is no better than trading short term with a long view. Case in point, when commodities were riding high, the Canadian loonies broke above the USD. See what is happening now.
1
Although an entertaining aspects of China's capital flight problem it's hard to believe smurfing is where the problem is concentrated. Offshore purchases of real estate and foreign corporations by Chinese corporations and wealthy individuals who themselves are able to incorporate is where the real action is. Since most of these corporations have official connections while the individuals are often members of the Chinese Nomenklatura any real action to deal with the problem seems unlikely unless the situation becomes critical and they are a long way from that.
4
Same old, same old problem of letting hot, foreign money into your system. The reality is that China doesn't need any foreign currencies or debt denominated in a foreign currency; it long since passed critical mass when it comes to its own currency.
2
I'm not happy about the real estate inflation caused by wealthy Chinese investors here in NY either, but for all those criticizing China's global expansion, please remember that from the 1800s right up until WWII China was the victim of Western colonization and imperialism. Unequal treaties, concessions, Opium Wars, etc. all gave rise to the Communist movement and shaped the mindset that still dominates Chinese thinking to this day. They consider themselves to be victims, rightfully reclaiming their dominant position in the world. Americans, meanwhile, should be less Sinophobic and more opportunistic. Learn Chinese, go to China and look for opportunities to profit there, just like they're doing here. If you had bought an apartment in Shanghai 10-15 years ago you would have quintupled your investment by now. Chinese investment in U.S. real estate today is reminiscent of Japan buying up NYC for unthinkably high prices in the 1980s, to much consternation. But within 10 years Americans had bought it all back at fire sale prices.
7
To all the commenters lamenting the inflationary distortions of this or that local real estate market due to the influx of mainland Chinese money; how many of you blithely bought ever cheaper "made in China" goods over the years? When the local plant down the road was closed down and moved to Shenzhen did you get off your duffs and protest? Did you even call your congressperson?
9
I've been making it a practice for years, to avoid purchasing Chinese goods. I don't believe a rich and powerful China augurs well for the U.S. Have we brought some of this on ourselves? Absolutely, Our foreign policy in the East and Middle East has been greedy, short sighted, and wrong. Still, I have no wish to help them get revenge.
6
US, EU, and Japanese FDI (foreign direct investment) made China what it is today in the name of "global competitiveness" resulting in global wage deflation and the exodus of millions of economic immigrants into this country from the south. This was at least 30 years in the making.
12
The logic of this for the Chinese leaders evades me. Currency control can make sense if you have a good reason. But what is the purpose here beyond keeping Uncle Sam happy? It only costs money.
Given the huge devaluations that the Russians have stomached without much trouble I am really amazed to see the Chinese make so much fuzz about a few percent.
Given the huge devaluations that the Russians have stomached without much trouble I am really amazed to see the Chinese make so much fuzz about a few percent.
I will chime in from Portland Oregon on the subject. This once charming little town full of really nice people has become one more example of what happens when Chinese money with the addition of short term hot money whether from investors or the latest temporary tech haven arrives. We have had at least one boom and bust in the last ten years when many simply walk away from their homes if they were ever occupied to begin with and the feeling that things are really pretty frothy again. The worst effect of this Asian Invasion though has been that so many folks who grew up in the area are no longer able to even rent so they either must move or join what seems like the highest per capita homeless population in the nation. It is really an epidemic that needs to be addressed. Those formerly polite, happy folks are becoming real grumps, myself included and I wish the young folks would stop saying "no worries" they should be plenty worried as the American standard of living and way of life has been thrown under a bus as the clothing "designers" and manufacturers of other junk flooding the market sent the jobs to China, does that shirt or blouse still seem like such a good deal when you figure out it helped put that homeless person in rags on the street? There needs to be several changes: remove the" for sale"sign on America to gain citizenship, buy American and elect Bernie, he is the only candidate who understands the problems. We don't need TTIP or Hillarys wars of choice.
26
You make very good sense, but I'm afraid your warnings fall on deaf ears.
Whenever I stand in a Grocery store checkout line, if I am at the end & there are more than 3 people in a line, someone will inevitably come over & ask me to go to the Automated checkout line. "No waiting". And I reply "No thanks. Those lines cost people their jobs". To a person, I get the eye roll and they walk away.
NO one can be bothered in the slightest way if it means even the tiniest of inconvenience. You are shouting to folks who couldn't care less that they are being sold out & undermined.
Whenever I stand in a Grocery store checkout line, if I am at the end & there are more than 3 people in a line, someone will inevitably come over & ask me to go to the Automated checkout line. "No waiting". And I reply "No thanks. Those lines cost people their jobs". To a person, I get the eye roll and they walk away.
NO one can be bothered in the slightest way if it means even the tiniest of inconvenience. You are shouting to folks who couldn't care less that they are being sold out & undermined.
5
You make real sense. It's not just Portland though. America is in the midst of a second great Depression. And you NEVER hear about the Homeless whites. It's always about the inner cities.
The "news" has carefully jumped over the giant epidemic of homelessness in our Country. Bernie gets it. He might be the only one. Sadly, as much as I love him, I don't think he'll win. He's got my vote.
Things are going to have to get even worse before people pay attention. When the people in government start to face Homelessness, themselves; they just might listen.
I think we need restrictions on real estate, new laws on foreign investors and we need to offer housing for the Homeless, many of whom worked their whole lives and paid taxes as Citizens and look what they got for it?
Every day and night I have a Home and shelter, I thank the Lord; because I know, there are many out there without a home.
The "news" has carefully jumped over the giant epidemic of homelessness in our Country. Bernie gets it. He might be the only one. Sadly, as much as I love him, I don't think he'll win. He's got my vote.
Things are going to have to get even worse before people pay attention. When the people in government start to face Homelessness, themselves; they just might listen.
I think we need restrictions on real estate, new laws on foreign investors and we need to offer housing for the Homeless, many of whom worked their whole lives and paid taxes as Citizens and look what they got for it?
Every day and night I have a Home and shelter, I thank the Lord; because I know, there are many out there without a home.
4
I find the service and speed of a human cashier far superior to that of a self service checkout which always seems to develop some problems that need human intervention.
2
what no one realizes is that these wealthy elite basically printed money and gave it and lent it to themselves then they smuggle it out of the country and launder it in our real estate while leaving their kids in our schools and grandma to get medical treatment here. Whats in it for us?
21
What's in it for us? Big sale this weekend at Harbor Freight. (Again).
1
" ... As the Chinese economy stumbles, ..."
please, do not use such words, you can do better than that.
Greece is stumbling, China is not.
Were China stumbling, the US would already have failed.
In fact, the US today would like to be as stumbling as China is "stumbling".
With growth rates around 7%.
please, do not use such words, you can do better than that.
Greece is stumbling, China is not.
Were China stumbling, the US would already have failed.
In fact, the US today would like to be as stumbling as China is "stumbling".
With growth rates around 7%.
3
Vancouver has many high-end, empty condos owned by wealthy Chinese investors. Similarly, wealthy Chinese have invested heavily in Boston area real estate. In both cases, such foreign demand has pushed prices beyond the range of what most locals can afford.
18
In the Palm Springs area Canadians are selling and the Chinese are buying for pretty much the same reason. The dollar is strong so Canadians are cashing in and selling their second homes. The dollar is strong so the Chinese are investing in real estate that is prestigious and relatively cheap. They then rent the properties out and hide the US cash.
5
So, the Chinese government imposes no limits if the money goes out to buy foreign real estate.
No wonder NYC, LA, San Fran, Seattle are becoming unaffordable to Americans. Who can compete with that outflow of, often questionably obtained, money?
No wonder NYC, LA, San Fran, Seattle are becoming unaffordable to Americans. Who can compete with that outflow of, often questionably obtained, money?
18
The Chinese buying up real estates the world over is termed asset diversification - a Wall Street strategy. Dirty Chinese money that found their way out were mainly through US and European banks' round tripping- no Chinese banks were prosecuted for money laundering.
A Goldman Sachs' strategist in Aug 2015, advanced the causality of the RMB depreciation to expected US interest rate hikes. Then, 18 Jan, the same strategist advance the prognosis, that the RMB rapid devaluation, is a causality of Chinese policies -his advice should be discredited.
There are 2 big events that are intertwined - one a capital market phenomenon called Carry Trades - this has been played out before, the Yen Carry trades to the detriment of Japan and now we have the USD carry trades. The other is the formation of of AIIF - a challenge to the IMF and World Bank, which are European, US centric. The AIIF, has its main sponsor, the PRC, a creditor nation whilst the IMF and World Bank, has its largest contributor, the US, a debtor nation. In between, we have the vultures of finance, the bankers of Wall Street, the City, Zurich and Frankfurt craving out the territories with other peoples' money - USD, Euro, RMB, Yen, SFr, et el.
China, has imported technologies the world over. Unfortunately, with Finance the returned Chinese Wall Street veterans infiltrated Shanghai with their Wall Street software connectivity. Chinese monetary policy makers need to be wary of Goldman Sachs' "in your interest" advice.
A Goldman Sachs' strategist in Aug 2015, advanced the causality of the RMB depreciation to expected US interest rate hikes. Then, 18 Jan, the same strategist advance the prognosis, that the RMB rapid devaluation, is a causality of Chinese policies -his advice should be discredited.
There are 2 big events that are intertwined - one a capital market phenomenon called Carry Trades - this has been played out before, the Yen Carry trades to the detriment of Japan and now we have the USD carry trades. The other is the formation of of AIIF - a challenge to the IMF and World Bank, which are European, US centric. The AIIF, has its main sponsor, the PRC, a creditor nation whilst the IMF and World Bank, has its largest contributor, the US, a debtor nation. In between, we have the vultures of finance, the bankers of Wall Street, the City, Zurich and Frankfurt craving out the territories with other peoples' money - USD, Euro, RMB, Yen, SFr, et el.
China, has imported technologies the world over. Unfortunately, with Finance the returned Chinese Wall Street veterans infiltrated Shanghai with their Wall Street software connectivity. Chinese monetary policy makers need to be wary of Goldman Sachs' "in your interest" advice.
1
Lessons for Sen Sanders ideas of punitive taxing of the rich; they have ways of moving money, and now increasingly giving up USA citizenship. There are reasons that Socialism is closer to Communism than to Capitalism.
President Obama, as head of number one economy, is being maneuvered to endorse Sen Sanders as POTUS for economy he wants to change. He is running out of time to affirm USA as Capitalist.
President Obama, as head of number one economy, is being maneuvered to endorse Sen Sanders as POTUS for economy he wants to change. He is running out of time to affirm USA as Capitalist.
4
Hey, they are only following the lead of our super wealthy over here, taking their ill gotten gains out of the country that made it possible to get their ill gotten gains.
14
Well remember the widespread panic when the Japanese bought Rockerfeller Center? These things are just a flash in the pan without any real significance. When the Chinese buy Trump Tower, then I would begin to worry.
3
Well we dont need any more of their money. The place is full of ghost houses money laundering banks - and real estate prices have doubled in the last few years.
I suppose in terms of geopolitics its a good thing though. Because China will tank their surplus will diminish, however it has destroyed the wonderful left leaning, liberal intellectual community that was Palo Alto and replaced it with empty ostentatious mc mansions, and filled our schools with students who are older than they declare and who following their parents have no regard for the rules or for truth.
I suppose in terms of geopolitics its a good thing though. Because China will tank their surplus will diminish, however it has destroyed the wonderful left leaning, liberal intellectual community that was Palo Alto and replaced it with empty ostentatious mc mansions, and filled our schools with students who are older than they declare and who following their parents have no regard for the rules or for truth.
16
The reporter is trying to act like an expert on China.
Let us list some facts here, Chinese are 45% of worldwide luxury goods buyer in 2015. Where are the US dollar coming from?
Chinese are the major investors on US housing market.
Black market is available for Chinese to move around the money. US is the largest market for Chinese to buy properties. Many of these money are taken out through Hong Kong black market.
Chinese take out the money for varies reasons, this reporter just like most of the medias here, mislead American readers by twisting the stories, of course, some Chinese lost some confidence and want to move some money overseas. It is also the fact, but it is really not the main reason for us to move out the money.
Let us list some facts here, Chinese are 45% of worldwide luxury goods buyer in 2015. Where are the US dollar coming from?
Chinese are the major investors on US housing market.
Black market is available for Chinese to move around the money. US is the largest market for Chinese to buy properties. Many of these money are taken out through Hong Kong black market.
Chinese take out the money for varies reasons, this reporter just like most of the medias here, mislead American readers by twisting the stories, of course, some Chinese lost some confidence and want to move some money overseas. It is also the fact, but it is really not the main reason for us to move out the money.
1
The Chinese (and others, of course, in similar straits) have hopelessly distorted the real estate market, especially in California. If you wonder why prices are back to 2006 pre-bubble levels -- this is part of the reason. Who do you think are paying these stratospheric prices, without a blink?
6
Your reporting on the outflow of money from China is very outdated. For at least a decade "political capital" has been flowing into major markets. Real estate is a convenient investment particularly buying luxury alts in cities like London. Laundering money from the Mainland is an old story.
3
I've been saying the entire Chinese economy is doomed for several years. If you're smart and read what's going on in the country, it's not too hard to figure out. You can't have "free" markets (not that any market is truly free) and try to control every aspect of life in the country. China is going to imploded in the next several years.
3
China is imploding. Curiously none of the presidential candidates is talking about it, yet if implodes it will present the greatest foreign policy challenge the U.S had faced since 9/11.
2
Well, it's evident that the wealthy Chinese have been studing our wealthy American 1% far more closely than we knew. Raw capitalism, isn't just swell all over the world.
1
A citizen may not be able to move cash from China, but they can buy real estate or a foreign business instead.
When I left Vancouver in 1986 it was a clean, beautiful city of just over a million people. Now there are over 4 million people, over 60% Chinese and the houses are price beyond the reach of most Canadians. Houses are bought sight unseen and often sit empty or whole blocks are torn down to put up crappy condos that are so poorly constructed they often often need to be rebuilt after twenty years. All the buildings look the same. Because many of the apartments are empty, the local businesses struggle. If no one is living there, they aren't getting their dry cleaning done or shopping. Universities and colleges are full of Asian kids and Canadian kids can't compete. There is a severe homeless problem, along with an epidemic drug problem. The city is dirty and the infrastructure has not kept up. It's not just Chinese, it's wealthy Russians, Iranians and others who are off shoring their ill gotten gains. A BMW is the equivalent of a Toyota anywhere else and all around there are entitled rich kids with their Teslas and Porches. B.C. was a largely resource based economy prior to the influx of money from overseas, the laid back culture has been replaced by the hustle of Hong Kong, in parts of the city, there are no English, let alone French signs, it is all Chinese. Real estate signs sprout like mushrooms and that is the new economy. I had planned to return to my hometown to retire, but I could no more afford to live there than I could in Manhattan. My country has been sold.
41
You are absolutely correct, and it is not just Vancouver, though they have been hit perhaps hardest. I'm American, but live on the US/Canada border. Before the passport requirement, we used to go up to Canada 2-3 times a year. We loved it up there -- so clean and unspoiled. We even talked about a cabin somewhere in rural Ontario someday. But today? Yikes. The big cities in Canada are unrecognizable -- crowded & dirty. Homeless people used to be unknown in Canada.
And the prices: if I were Canadian, I'd be seriously worried. It has ALL the markings of the crash in the US 8 years ago, with prices up 300% and more without a economic foundation besides speculation, investors from abroad and yes, the huge influx of Chinese.
Instead, I see Canadians who are smug (so long as they already own a house) because they are gleeful about their paper profits. But we saw how that turned out in the US (though we are doing it again too!).
I am less familiar with Vancouver than Toronto, but I have west coast friends who tell me exactly what you write here. Canada has had an odd immigration policy in the last 15 years, welcoming without exception almost any wealthy asians, but rejecting virtually ALL Americans with an interest in emigrating.
And the prices: if I were Canadian, I'd be seriously worried. It has ALL the markings of the crash in the US 8 years ago, with prices up 300% and more without a economic foundation besides speculation, investors from abroad and yes, the huge influx of Chinese.
Instead, I see Canadians who are smug (so long as they already own a house) because they are gleeful about their paper profits. But we saw how that turned out in the US (though we are doing it again too!).
I am less familiar with Vancouver than Toronto, but I have west coast friends who tell me exactly what you write here. Canada has had an odd immigration policy in the last 15 years, welcoming without exception almost any wealthy asians, but rejecting virtually ALL Americans with an interest in emigrating.
12
Amen Having visited Vancouver over the yrs - I agree. Aside from Stanley Park its YUCK.
2
Isn't it the new reality of US or Canada that every country needs new blood either from Europe, S. America, or Asia? In Texas, we have plenty of people from Mexico. They provide the youth, the energy, and racial dynamics to support our local economy. I am fine with that.
Whenever a Chinese person comes to money the natural inclination is to take it out of China. This has been the case for 20 years and is not necessarily a response to the current state of economy. Once you are successful in China then what's next? The next step is to emigrate. There is nothing else left.
1
But developed countries keen to draw fund from China and China is also enthusiastic to invest all over the world. OPEC are rich due to the nature's gift but China has become the second largest economy in the world and has strong foreign reserve by ambition & self discipline to prove the success of its communist policies.
The struggle of China today is due its search for the midway between its "saturated communism "and reluctance to become a democracy. The 'Renminbi " has not yet started its race with $US
by surfacing out of "SDR basket'.
The struggle of China today is due its search for the midway between its "saturated communism "and reluctance to become a democracy. The 'Renminbi " has not yet started its race with $US
by surfacing out of "SDR basket'.
I hope the Red Cross is ready on W 57th Street to accept the expected influx of refugees.
1
i guess the chinese government finally figure it out that our fed keep the rate near zero. give chinese almost none interest which add nothing on their huge reserve. and they also see no light at the end of tunel. may be, just may be, they're trying a different approach to invest their money with other then the treasure bond which offer a higher return?
One of the great threats to the US economy is if China has to devalue its currency by 30% to produce higher rates of growth. China must defend its currency by any means necessary. Why is devaluation a threat to the US economy? All goods and services exported by China will be 30% cheaper. Hard to compete against.In addition US firms that have earnings in China will have a devaluation in their earnings, and the stock market may have a wild correction.
The level of building that has occurred in China over the last fifteen years is the greatest building boom in the history of mankind. Although the Chinese stock market has been falling, it is clear that they have the ability to short and profit from that fall. So that is not a real threat to China. Pollution is a real threat not only to China but also to the rest of the world, for their air quality and water quality is so poor. If you were not leaving China, it would not effect you unless you wanted to buy exports for they would become more expensive. The wealthy love to invest in currencies that may get stronger in the future. So many want to take their money out of China and invest it in the USA for the dollar will get
stronger. Quid Pro Quo, if the Chinese are left or aided to get out of this decline, they must commit to changing the aggression of North Korea. It is that simple, for China can rebound if all are in unison to invest once again. They must also destroy the artificial island they built which is causing stress.
The level of building that has occurred in China over the last fifteen years is the greatest building boom in the history of mankind. Although the Chinese stock market has been falling, it is clear that they have the ability to short and profit from that fall. So that is not a real threat to China. Pollution is a real threat not only to China but also to the rest of the world, for their air quality and water quality is so poor. If you were not leaving China, it would not effect you unless you wanted to buy exports for they would become more expensive. The wealthy love to invest in currencies that may get stronger in the future. So many want to take their money out of China and invest it in the USA for the dollar will get
stronger. Quid Pro Quo, if the Chinese are left or aided to get out of this decline, they must commit to changing the aggression of North Korea. It is that simple, for China can rebound if all are in unison to invest once again. They must also destroy the artificial island they built which is causing stress.
1
All dictatorial governments feed money into their systems to show economic gains but don't want the to leave nor to have prices rise thus they put on 'controls'. Both China and Venezuela have this problem. Their rules aren't working. THEY NEVER WORK. There are not enough fingers to put into the dams.
Would someone please develop a model which would predict how the U.S. (or European) economy would perform if subjected to the controls used by the Chinese government? Surely the best & brightest at Stanford, MIT, it. al. could get a grant to develop such a model. And surely it would be of great help voters now trying to decide for whom to vote in upcoming elections.
1
Just recently, the International Monetary Fund approved China's renminbi to join the ranks of US dollar, euro, Japanese Yen and British pound in the list of currencies the IMF uses as an international reserve asset. What was the basis for that decision if the Chinese themselves are losing confidence in the yuan. This calls into question the poor judgement and credibility of the IMF and its head Christine Lagarde.
3
I like the way people are turning the reaction of a mistrust in a government into greed by people. Remember, people who voice criticism of the Chinese Communist leadership are disappearing. I suppose that one could have also rationalized that the flight of Jewish capital from Nazi Germany was simply greed by the Jews.
1
Money Is Flowing Out of Emerging Markets
After years of capital flooding into emerging economies, it is now heading the other direction.
Net capital flows to emerging markets, in billions, (figures are based on a rough chart-reading)
2000-2005 440 or 88 per year
2006-2010 960 or 192 per year
2011-2014 1244 or 311 per year
2015 -100 (the negative sign denotes capital outflow)
2016 -720 (Estimated)
Adjusted to reflect errors and omissions
Source: Institute of International Finance
See http://www.nytimes.com/2016/02/05/upshot/if-there-is-a-recession-in-2016...®ion=top-news&WT.nav=top-news
The author of this article states that “Over the last year (i.e., 2015), companies and individuals have moved nearly $1 trillion from China.” There seems to be a ten-fold over estimate. China’s annual G.D.P is about $11 trillion. Can China afford to lose one tenth of its G.D.P as a result of capital outflow last year?
After years of capital flooding into emerging economies, it is now heading the other direction.
Net capital flows to emerging markets, in billions, (figures are based on a rough chart-reading)
2000-2005 440 or 88 per year
2006-2010 960 or 192 per year
2011-2014 1244 or 311 per year
2015 -100 (the negative sign denotes capital outflow)
2016 -720 (Estimated)
Adjusted to reflect errors and omissions
Source: Institute of International Finance
See http://www.nytimes.com/2016/02/05/upshot/if-there-is-a-recession-in-2016...®ion=top-news&WT.nav=top-news
The author of this article states that “Over the last year (i.e., 2015), companies and individuals have moved nearly $1 trillion from China.” There seems to be a ten-fold over estimate. China’s annual G.D.P is about $11 trillion. Can China afford to lose one tenth of its G.D.P as a result of capital outflow last year?
1
A recent poll found that 50% of rich Chinese want to immigrate to the USA. The number is about 300 million Chinese citizens, including their families. Of course, rich Chinese can immigrate quickly via the rich person resident Visa program. So, expect the USA to be 50% Chinese within 20 years. A lot of not so rich Chinese want to immigrate too, and they can just over stay a travel VISA. Will they vote for Democrats along with the other "non whites"?
5
Look at Canada: they are approaching at least 1/3rd Asian population, in a nation that was previously almost all white and European-ancestry.
6
Better 50% well educated, wealth Chinese than 50% uneducated, illiterate, non-English speaking third world peasants from Mexico and Central America.
1
Rats scurrying off a sinking ship. There's no other way to look at the situation.
3
So all that time -- these past 20 years, we were led to believe China had some kind of genius for growth-- an unbeatable combination of technology brilliance, management precision, and worker disciple. And really it was just a bunch of money hoarding bullies-- who lied, and cheated, and beat up the little guy.
And now that the gig is up they are out of there, taking their loot with them.
This is the new face of Global Capitalism.
We are next.
And now that the gig is up they are out of there, taking their loot with them.
This is the new face of Global Capitalism.
We are next.
8
So much for China's efforts to make the renminbi a Reserve Currency.
Heavy manipulation of its value makes it worthless for that purpose.
Heavy manipulation of its value makes it worthless for that purpose.
The Chinese moms I met, teaching at Berlitz in San Diego, wanted to be here to have good public schools and clean air for their children. They got here on student visas, and had to be in class so many hours per week to meet the requirements. Perhaps they didn´t mention the political situation out of politeness and reserve to me, their teacher, but this is the story they told me. Most of the mothers I met moved to La Jolla, but they mentioned friends who were moving to the LA area as well as Orange County.
1
" Over the last year, companies and individuals have moved nearly $1 trillion from China."
I find it absolutely amazing that in a few decades since the major change from strict communism to capitalistic models of communism that "ordinary" people could actually accumulate that much money considering how cheaply their goods are sold not only here but worldwide. The amount of goods sold and the profits must be astronomical.
. I wonder if Congressman King would characterize these money mules as " they've got biceps the size of cantaloupes because they've been hauling" around so much money?
I find it absolutely amazing that in a few decades since the major change from strict communism to capitalistic models of communism that "ordinary" people could actually accumulate that much money considering how cheaply their goods are sold not only here but worldwide. The amount of goods sold and the profits must be astronomical.
. I wonder if Congressman King would characterize these money mules as " they've got biceps the size of cantaloupes because they've been hauling" around so much money?
1
I have never had confidence in anything Chinese.
After the incident of them poisoning their own babies by spiking the baby formula I knew this was a very sick society. It was all about profit at any cost and human life was meaningless to them. (A lot like Flint, MI).
Everything I have bought that is marked "made in China" has been pure junk. I no longer purchase their so called goods.
If their products are of this quality you can only imagine their rigged economy and stock market.
The emperor truly has no clothes.
After the incident of them poisoning their own babies by spiking the baby formula I knew this was a very sick society. It was all about profit at any cost and human life was meaningless to them. (A lot like Flint, MI).
Everything I have bought that is marked "made in China" has been pure junk. I no longer purchase their so called goods.
If their products are of this quality you can only imagine their rigged economy and stock market.
The emperor truly has no clothes.
6
Even with all the negative news such as the economic slowdown, capital flight, eroding foreign exchange reserve, and devaluation pressure on its currency, there's perhaps no need to unduly worry about the prospects of the Chinese economy, as after a long spell of economic boom, largely inflated rather, it's now in a correctional mode, attuning itself to the market realities.
1
Oh, the problem with all that wealth and what to do with it. I sure am glad I'm not rich. Pity I can't even muster a single tear for them.
14
mitt Romney would say you suffer from class envy. Democrat, are you?
1
As if the housing prices in the Bay Area aren't ridiculous enough already..........
49
There is still another $3 trillion to leave China. You can follow the money exodus at http://www.bloomberg.com/quote/CNGFOREX:IND
All the real estate brokers I have spoken to have said that cash buyers, mostly Chinese, have made up 25% to 50% of the buyers since 2008. I have been a longtime supporter of affordable housing in the Bay Area, but I have really become disgusted by the demonization of the tech workers by all the other residents of this region. Longtime white Bay Area residents have been all of my landlords, and each of them has gone on to sell their properties for millions of dollars (10 times + what they paid). Although some of the buyers were tech workers, when a young working person buys one of these places from a long term owner (who have been, in my experience, three retirees, a federal employee, a housewife, and a plumber), the former owner gets $1 million +, while the tech worker gets a mortgage they can barely afford. But everyone who is getting pushed out of housing blames tech workers, whereas the issue of this foreign buying is totally off the radar, right where the brokers want it. It is longtime mostly white Bay Area residents that are victimizing one another on this one, the foreign investors are the 1% who really should be blamed, and tech workers are one's actually building this country's economy, but they get all the blame.
6
@commenter: except this is not new at all. I remember being a student back in 1978, and a friend of my mothers, in LA, hosting me for a visit and she told me about the rampant housing inflation (this was THE period of runaway inflation under Carter) that was destroying her LA suburb and had taken her modest $60K home and turned it into a nearly $400K property -- a LOT back then -- and that it was driven primarily by foreign buyers. At that time, it was more Middle Easterners with oil money than Chinese, but the pattern was there.
Americans do not realize how attractive and inexpensive even inflated property prices are to foreigners with millions and billions of dollars to spend, or how they long to become our new oligarchs.
Americans do not realize how attractive and inexpensive even inflated property prices are to foreigners with millions and billions of dollars to spend, or how they long to become our new oligarchs.
3
Grass is always greener over the fence!
7
It's brown on both sides.
1
This exodus represents a capitalist brand of individualist greed and underscores how thoroughly capitalism inserts itself in cultures. First it gives, then it takes. This event is not surprising in itself. China's long-term response will be interesting.
15
This has become very apparent in the major California real estate markets. We need laws similar to what like other nations have implemented, wherein if you purchase residential real estate you are taxed heavily if the property is not occupied. Wealthy Chinese citizens parking their money in the United States has already caused the real estate prices to be completely divorced from their local economies, making life very difficult for those who actual live here.
191
Hey there,
You are so correct about thge real estate market. I grew up in Arcadia, Ca, well to do middle class suburb of Los Angeles. Starting some 20 yrs ago? money from Hong Kong started to arrive in Calif, moved out because of the take over by China. So much money came in to real estate, housing prices were going way up, and then $$ started to come in from the mainland, and it is totally insane now in Arcadia, San Marino, Temple City, etc. They buy old homes for huge amounts of cash! tear them down and put up mammoth mansions, way beyond what any normal family would need. Next to my parents home, tear the house down, build a 6500 sq ft home, pool, spa, theater, 2 kitchens 5 bdrms, 6 bathrooms, etc and a family of 2 adults, 1 small child live there! The man is only 30 yrs old, supposedly runs his own business, but now I think he is taking $$ from family in China to invest in local real estate. This has just driven prices to where they are obscene and you can see the greed on dispaly everywhere in the San Gabriel valley area. Only, Only, the rich Chinese can afford to buy the real estate, drive expensive cars and so many of the homes sit vacant for years! DUH America??
They are making living out of reach for many average American citizens. Where does all of that $$ come from? I think you answered that in this article..Thank you for writing it
You are so correct about thge real estate market. I grew up in Arcadia, Ca, well to do middle class suburb of Los Angeles. Starting some 20 yrs ago? money from Hong Kong started to arrive in Calif, moved out because of the take over by China. So much money came in to real estate, housing prices were going way up, and then $$ started to come in from the mainland, and it is totally insane now in Arcadia, San Marino, Temple City, etc. They buy old homes for huge amounts of cash! tear them down and put up mammoth mansions, way beyond what any normal family would need. Next to my parents home, tear the house down, build a 6500 sq ft home, pool, spa, theater, 2 kitchens 5 bdrms, 6 bathrooms, etc and a family of 2 adults, 1 small child live there! The man is only 30 yrs old, supposedly runs his own business, but now I think he is taking $$ from family in China to invest in local real estate. This has just driven prices to where they are obscene and you can see the greed on dispaly everywhere in the San Gabriel valley area. Only, Only, the rich Chinese can afford to buy the real estate, drive expensive cars and so many of the homes sit vacant for years! DUH America??
They are making living out of reach for many average American citizens. Where does all of that $$ come from? I think you answered that in this article..Thank you for writing it
11
while I agree with you, this is naturally a 2-way street requiring a greedy seller to be part of the bargain. But don't fret too much, the Chinese will surely buy up most of the world's technology in short order in any case. They have recently bough Syngenta, a Swiss Monsanto-like company of seeds and agricultural products. They will soon control not only entertainment but the food supply and of course, all of the real estate that they have been buying for years. The business of America IS BUSINESS, n'est pas?
2
How about those people who sold to the Chinese and made out like bandits?
4
So if the Chinese currency collapses, we will probably bail them out. Why bother to invest in silly things like US infrastructure when we can ship our dollars overseas, just like we did with jobs. Your tax dollars at work.
13
we already shipped the dollars to China when they bought 1.3 trillion dollars in bonds, just BEHIND the Japanese. I do believe that the deed to the WH was included in one of the deals.
4
And my very rich and very happy new Chinese neighbors explain their quick flights back to China every 3 months to "teach a class" and "check on their village!" Surfing -' love it! Who can blame them?
13
I blame them. And I blame us for lax laws on foreign property ownership. Moreover, how much of that wealth was made on the backs of over-exploited, underpaid peasant workers, moved from the field to the factory in a short period of time?
12
To get money out of China, one has to have excess money first. Who does? The class of citizens who have most benefited and continue to benefit from the system, namely the 80 million well-connected Communist Party members. If this trend continues, it won't take long for the masses to rebel, especially when they see their hard-earned improvement of living standards melt away. My guess is that Xi's administration is in a panic mode right now and will adopt even more repressive policies in the near future. Let the Yuan float freely and things will gradually stabilize after an unpleasant period of turmoil. Otherwise, all the patching solutions will only exacerbate speculations of the worst kind and bring the economy - and the social stability - to a halt.
44
Does an authoritarian regime have the confidence to trust free spirits enough? Every moment that doesn't yield to their control is a moment they fear. There will be many such moments if they let the currency float, so they will be extremely afraid to let go.
The move from tight, authoritarian society to even a partially free society is not easy. The Chinese have to earn it.
The move from tight, authoritarian society to even a partially free society is not easy. The Chinese have to earn it.
I would imagine there are a lot of wealthy factory owners - you know - the places we sent our manufacturing to. Thank you Bill Clinton for encouraging that. Ross Perot was ever so right on this one - as was Pat Buchanan (gasp!).
Chinese are buying sight unseen in the Bay Area. One realtor told how he went to a real estate fair in China, and a wealthy Chinese man was interested in one of his properties. By the time the man had flown home, the wealthy Chinese man was already here in his private jet.
There are consortiums of Chinese realtors operating in the Bay Area (and elsewhere.) Just one of these consortiums, just one, has over 3000 Chinese realtors in it, representing God only knows how many buyers.
The government needs to stop this. No one is addressing it. Time for some online petitions!
Chinese are buying sight unseen in the Bay Area. One realtor told how he went to a real estate fair in China, and a wealthy Chinese man was interested in one of his properties. By the time the man had flown home, the wealthy Chinese man was already here in his private jet.
There are consortiums of Chinese realtors operating in the Bay Area (and elsewhere.) Just one of these consortiums, just one, has over 3000 Chinese realtors in it, representing God only knows how many buyers.
The government needs to stop this. No one is addressing it. Time for some online petitions!
4
Letting the currency float does not prevent the well connected from exporting their cash. The Chinese, by virtue of being a totalitarian, centrally controlled economy have the worst of both worlds. Although some working people saw growth of their income, the bulk of the benefits have accrued to the cronies. The government control has led to overinvestment in some sectors, steel, housing, military and the workers haven't gotten enough of the lucre that they can afford the newly built housing or consumer goods. The cronies, looking to insure their wealth (which in a communist country should belong to the people) are exporting their wealth.
All of the very high end real estate for sale on the west coast and in other select North American cities are heavily advertised in China. If you look online at these 'homes' you'll find accompanying videos in Chinese. This is a real estate boondoggle that has been going on for some time now.
Question is when will it all bottom out? And should we be admitting Chinese nationals with their mostly ill-gotten millions without question? We should follow NZ, Australia, Switzerland, etc. by not allowing this mass exodus to invade and over inflate real estate valuations and make it unaffordable for US citizens. Cash buyers of multi-million dollar properties should be more closely examined by our gov't. and if not discouraged, refused flat out.
The buying of American citizenship by former party members of the People's Republic of China (or their business cronies), does not sound like a sound policy for our national security.
Question is when will it all bottom out? And should we be admitting Chinese nationals with their mostly ill-gotten millions without question? We should follow NZ, Australia, Switzerland, etc. by not allowing this mass exodus to invade and over inflate real estate valuations and make it unaffordable for US citizens. Cash buyers of multi-million dollar properties should be more closely examined by our gov't. and if not discouraged, refused flat out.
The buying of American citizenship by former party members of the People's Republic of China (or their business cronies), does not sound like a sound policy for our national security.
102
It will bottom out after the nonperforming construction loans on Chinese bank books are dealt with. Until then, money will flee the country, but things are going to get really ugly there in the meantime.
1
Look on Juwai.com
They were even advertising Boulder Colorado's affordable housing units to Chinese. Boulder's politically correct response was that "we don't discriminate in our housing program".
They were even advertising Boulder Colorado's affordable housing units to Chinese. Boulder's politically correct response was that "we don't discriminate in our housing program".
1
The Chinese are colonizing Every square inch of land they can in all countries of the world. And they have been for years. Anyone who thinks that they will contribute to democracy doesn't know jack! Combine the Chinese and the Saudis and the rest of the super rich and we can only glimpse the disarray that will soon be upon us.
109
This week China issued a stern directive to ALL Chinese students, no matter where they're in school (i.e., the USA), that they are first and foremost CHINESE and it's their duty to always be patriotic. Patriotism, that last refuge of the scoundrel, and tyrants who are getting increasingly nervous as their economy flags and Chinese citizens begin to question the infinite wisdom of the Boys in Beijing. Those Boys in Black are getting jumpy. And that's not good.
20
"Some methods are perfectly legal, like investing in real estate elsewhere"
Like multi-$million real estate in NYC, via untraceable shell entities, as the Times has reported.
Like multi-$million real estate in NYC, via untraceable shell entities, as the Times has reported.
60
They're worried about their currency because it's basically worthless. Now they are laundering worthless cash and ill gotten gains into real assets.
http://www.abc.net.au/news/2015-10-12/chinese-investors-flooding-billion...
http://www.abc.net.au/news/2015-10-12/chinese-investors-flooding-billion...
3
Trump would stop this from happening.
More philosophical than discussion, but from my many years of observation, I find that like water cycles, and other factors, balance is a universal key word. When the pendulum swings too far to the right, or too far to the left, it will return to center. There is no "up" with no tomorrow. What goes 'up', will plateau then balance and come 'down'. Look at the housing boom, one example of many. This result of turmoil seemingly is learned by few, but forgotten by those involved. A graphic. If you have a floor to ceiling mobile, when you touch any one of the components, all will, to some degree, be put into motion.
This has been going on for quite some time, evidenced by the large number of advertisements for ridiculously-priced real-estate right inside the New York Times newspaper and Sunday magazine itself. Feb 7, 2016 magazine, inside cover: "1-4 bedroom residences priced FROM [i.e. lowest price] $2,180,000. Talk about having your cake and eating it, too. Truth be told, every newspaper and media outlet is feasting on the bounty: they decry the widening gulf of wealth in this country, decaying infrastructure and social inequities and proscribe remedies in the news and opinion departments, while their advertising departments gladly takes the money of any country's aristocracy. Even the Detroit Free Press, while rightly decrying the tragedy of the Flint Water Crisis and how GOP contempt for the poor and African-Americans has actually poisoned them, also has special "articles" about some beautiful Oakland County mansions or newly built Mac-chateaux. Although I usually agree with the NYT in many of their opinions and their journalism, I also acknowledge why, even with the most rational and eloquently-written editorial piece, their opinions will have virtually zero impact on the voting electorate. 10 fancy Manhatten condos could go a long way to feed or educate a lot of children in this country, and elsewhere. The disconnect here is amazing. So, will the NYT make a statement about this? That's an editorial worth reading about!
30
They cannot make a statement about this, without the wrath of the ad department and the owners of the paper. (For those who are naive: this publication is not some "public service" but a BUSINESS worth billions, and run by one family.)
They see no hypocrisy in stumping for the Democratic Party or crying about "inequality" or demanding high taxes for a socialist regime -- then advertising $10 million apartments or doing articles about people searching for a $900K condo and then doing $250K of remodeling to make it "just right" -- or reporting on the highest sales of the week, often over $20 million for a residence! Or decorating articles showing only the homes of the extremely wealthy and their lavish possessions. They stir up the envy and jealousy of the masses, and encourage greedy consumption and speculation -- then whinge whinge whinge about stuff like a $15 minimum wage.
Amazing.
They see no hypocrisy in stumping for the Democratic Party or crying about "inequality" or demanding high taxes for a socialist regime -- then advertising $10 million apartments or doing articles about people searching for a $900K condo and then doing $250K of remodeling to make it "just right" -- or reporting on the highest sales of the week, often over $20 million for a residence! Or decorating articles showing only the homes of the extremely wealthy and their lavish possessions. They stir up the envy and jealousy of the masses, and encourage greedy consumption and speculation -- then whinge whinge whinge about stuff like a $15 minimum wage.
Amazing.
2
As China has a sneezing spell we might do well to get our financial pneumonia shots. All the talk from the Obama Administration about its amazing restoration of our economy is already ridiculous as we see 20 million unemployed or underemployed around the nation, and it will likely become even more ridiculous if China gets a more serious financial coughing spell. The world of finance seems built on a shaky foundation of hope and hype that only a few builders appear to have the skills to deal with. The rest of the world goes up and down and around with the unpredictable gyrations and flow from an economic black hole somewhere out there in the banking universe. Apparently the Chinese are as mystified by economic challenges as all the world experts who are supposed to know how to ride out the storms but end up paddling futilely trying to keep our deflated rafts afloat.
4
IS Wall Street beginning to hear the sound of BANJOS.
1
We should all consider how much economic progress China has made over a relatively brief period.
Just over 50 years ago, China suffered from a horrible famine that took tens of millions of lives.
There is an old saying, before you criticize someone, walk a mile in their shoes.
I for one welcome China to the global community after years of relative isolation.
Economic growth in the real world doesn't occur in a straight-line.
They have the foreign currency reserves to withstand market volatility for a considerable period of time.
The 3rd Plenum was a smart plan for economic and social liberalization over an extended period of time.
While people are easily excitable in the short-run and the media enjoys polemic headlines, intelligent leaders rise above the fray and lead the country and the world forward.
That said, I think China would benefit from more legal protections for their citizens, as that would give more stability and comfort to large and small investors.
It is not so simple, and it must take time for a country of 1.3 billion people.
Democracy can be beautiful and occasionally ugly, but over time democracy, laws and a Constitution with rights for all citizens protect us from the worst impulses of humanity and lead a nation to a better, more secure future for everyone.
Just over 50 years ago, China suffered from a horrible famine that took tens of millions of lives.
There is an old saying, before you criticize someone, walk a mile in their shoes.
I for one welcome China to the global community after years of relative isolation.
Economic growth in the real world doesn't occur in a straight-line.
They have the foreign currency reserves to withstand market volatility for a considerable period of time.
The 3rd Plenum was a smart plan for economic and social liberalization over an extended period of time.
While people are easily excitable in the short-run and the media enjoys polemic headlines, intelligent leaders rise above the fray and lead the country and the world forward.
That said, I think China would benefit from more legal protections for their citizens, as that would give more stability and comfort to large and small investors.
It is not so simple, and it must take time for a country of 1.3 billion people.
Democracy can be beautiful and occasionally ugly, but over time democracy, laws and a Constitution with rights for all citizens protect us from the worst impulses of humanity and lead a nation to a better, more secure future for everyone.
12
"Just over 50 years ago, China suffered from a horrible famine that took tens of millions of lives."
That is the most generous description of the self-imposed, mass starvation known euphemistically as the "Great Leap Forward" inflicted by the Chinese Communists on the Chinese people.
With respect to wealthy Chinese sneaking their money out of the country, it speaks volumes about the Chinese Communists and their failure to gain the confidence of their people. The shame of it is, the Chinese left behind are the sheep of that population, thus perpetuating the corrupt rule of the Communists. It is analogous to the situation in Mexico, where the people with ambition abandon their country.
That is the most generous description of the self-imposed, mass starvation known euphemistically as the "Great Leap Forward" inflicted by the Chinese Communists on the Chinese people.
With respect to wealthy Chinese sneaking their money out of the country, it speaks volumes about the Chinese Communists and their failure to gain the confidence of their people. The shame of it is, the Chinese left behind are the sheep of that population, thus perpetuating the corrupt rule of the Communists. It is analogous to the situation in Mexico, where the people with ambition abandon their country.
5
Premiere Xi, it's called the free market. You can't control it.
10
Of course markets are controlled-- by governments. They don't exist all by themselves but only in a structure created by the government. Or in the case of the us, by corporations who have corrupted the government...
Careful thinking China's flight to US quality is a good thing for us. When the Japanese went on a similar binge 25-30 years ago, they artificially pushed up asset values here and caused a bubble. Things could be worse now because China's excesses may be greater, and the quality of Chinese borrowers in the US poorer.
8
The Chinese buying in the U.S. are paying cash. Perhaps they are borrowing in China, although my impression (living in the only majority Asian congressional district in the mainland U.S.) is that they are paying cash. Not a good thing if you are a "rich tech employee" who doesn't have rent control in the city, can't afford any kind of housing it all, and has to move continually from one rental to another as they are sold out from under you to foreign investors.
3
Borrow? They are paying cold, hard cash!
2
Makes sense to me!
these guys have bought up all the houses in vancouver and toronto, sight unseen. so much so, there can be no first timer affording a house in these places. soon the chinese will start buying homes in second tier cities. shame that the canadian cannot do anything to protect its own people. the only ones who profited are the real estate folks.
160
Your Commonwealth compatriots in Australia solved this problem very handily by simply making the sale of existing housing to foreigners illegal. Since the purchase of new housing was permitted, this naturally stimulated both the housing market and construction trades without reducing the housing supply. That solution has been out there for awhile, but I haven't heard anything about it from Americans, Canadians, or their politician. It would be nice if something was done to solve the problem in Canada before you end up like us here in the U.S., where politicians are too busy exploiting the resulting resentment and xenophobia to pay attention to real solutions.
63
It's the same situation in California.
15
Since the purchase of new housing was permitted, this naturally stimulated both the housing market and construction trades without reducing the housing supply.
An amazing example of government hypocrisy, and a profit motive as well. So, they didn't keep the Chinese out, and maybe ordinary Australians came out OK, but business profited enormously.
An amazing example of government hypocrisy, and a profit motive as well. So, they didn't keep the Chinese out, and maybe ordinary Australians came out OK, but business profited enormously.
So in the "people's paradise" the super wealthy share a behavior with their super wealthy American compatriots...that is, they own allegiance to no country, only their own money.
On another note, the Chinese are buying up property in Vancouver, B.C., driving up prices beyond the financial abilities of Canadians. The Canadian government is considering an investigation into the situation. It does appear that they have learn the basics of capitalism very well.
On another note, the Chinese are buying up property in Vancouver, B.C., driving up prices beyond the financial abilities of Canadians. The Canadian government is considering an investigation into the situation. It does appear that they have learn the basics of capitalism very well.
134
Rich foreigners have been able to buy their way into CANADA for at least 60 years. Money talks loudly. There is NO exclusion when you have the cash. Look at the change in Australia where the Asian wasn't even allowed in not so long ago. I'll be looking forward to reading the new KANTERBURY tales. The Chinese world is indeed "knowable".
3
Absolutely. I was going to comment with the same thought but you've done it. If they have all this extraneous cash, they need to have their taxes raised so that the Country that made them rich, can put the excess cash to good use.
This circumstance is nothing new. Witness how over time, the Chinese have bought up Vancouver BC as an example. I believe they have invested a lot of coin in San Francisco as well. It seems wealthy Chinese keep a foot in each jurisdiction, North America, and there own. Is like hedging your bet in case either ours, or their model , unwinds.
58
Capital flight is helping to prop up real estate markets in the U.S. and around the world. I'm guessing this trend will strengthen the U.S. dollar further. But it will lead to a further devaluation of the yuan. Rising wages in China are already putting pressure on employers to outsource jobs to Vietnam and other countries. Having middle-aged adults who "reverse-migrate" away from city factories only to stay unemployed in rural areas is both a tragedy and ticking time-bomb. The exodus of capital may soon be followed by an exodus of well-to-do folks.
14
There's a lot of bad reporting about what is happening in China, hence the confusion around devaluation. Capital flight out of China has been going on for more than a decade, with Chinese money flowing to Canada, Australia and the US to gain citizenship insurance policies. Macau's casinos have long been used to cover money laundering activities by Chinese government officials who've used Macau tourism to help get money out of China.
One element I wonder about is how much Chinese capital that is flowing into the US right now, particularly in real estate, is actually money borrowed in China secured by Chinese real estate and used to purchase property here.
One element I wonder about is how much Chinese capital that is flowing into the US right now, particularly in real estate, is actually money borrowed in China secured by Chinese real estate and used to purchase property here.
70
"Bad reporting"-- please explain. Support for alternative perspectives can't be effectively made by uttering simple declarative statements. Not that you're necessarily mistaken, but sources?
A REIT which will be sold as SYFA Real Estate Equity Fund. Minimum investment $1000000. They wouldn't want any peasants getting the same deal they are now would they. Oh, the acronym is easy to figure out. Begins with Save ends with, well you know, rhymes with sass.
Look to Vancouver for an extreme example of the effect of Chinese money laundering. It has destroyed communities and made the city unlivable. All because governments refuse to do anything about it.
I live in Mercer Island WA now. I recently received a real estate update from Coldwell Banker about recent activity in my neighborhood and they also mention how many brick and mortar offices they have in China--117 in Shanghai alone.
62
It is not clear how much outflow is legitimate investment
overseas. Chinese companies are making investments
overseas in large amount. Most of the outflow probably
accounts for this and is no cause for concern. Corrupt
individuals are trying to move their ill begotten wealth
overseas. NYT reported purchase of luxury houses in
USA by the Chinese. Obama Administration recently announced measures to track the purchases of luxury property-black money.Move it or lose it. currency
doesn't seem to show major fluctuations to create
panic. Google finance page lists exchange rates for
major currencies; Yuan shows minor fluctuations like
pound, Euro,etc. Much talked about devaluation
amounted to 5% which is less than decline of Euro,
Canadian and Australian dollars.
overseas. Chinese companies are making investments
overseas in large amount. Most of the outflow probably
accounts for this and is no cause for concern. Corrupt
individuals are trying to move their ill begotten wealth
overseas. NYT reported purchase of luxury houses in
USA by the Chinese. Obama Administration recently announced measures to track the purchases of luxury property-black money.Move it or lose it. currency
doesn't seem to show major fluctuations to create
panic. Google finance page lists exchange rates for
major currencies; Yuan shows minor fluctuations like
pound, Euro,etc. Much talked about devaluation
amounted to 5% which is less than decline of Euro,
Canadian and Australian dollars.
7
"If the government cannot keep citizens from rushing to the financial exits, China's outlook could darken."
While I understand that capital flight can be an economic problem, this statement strikes me as ironic and backwards, reversing cause and effect. China's economic outlook is dark because of the government's actions, and if the citizens are unable to move their money out, their outlook will certainly darken.
While I understand that capital flight can be an economic problem, this statement strikes me as ironic and backwards, reversing cause and effect. China's economic outlook is dark because of the government's actions, and if the citizens are unable to move their money out, their outlook will certainly darken.
4
Buying up more Vancouver BC real estate?
12
While the flight of physical capital is without a doubt worrisome, the bigger worry should be the flight of intellectual capital.
In order to escape the high-stakes pressure of the gaokao (the Chinese college entrance examination), any family that can afford to is sending their child to study abroad. And due to the relatively miserable environmental and living in conditions within China, many of those young people are not coming back to China once their education is complete.
In essence, China is suffering a very slow brain drain...
In order to escape the high-stakes pressure of the gaokao (the Chinese college entrance examination), any family that can afford to is sending their child to study abroad. And due to the relatively miserable environmental and living in conditions within China, many of those young people are not coming back to China once their education is complete.
In essence, China is suffering a very slow brain drain...
17
The Times reported on Chinese money flow into US real estate a few months ago:
http://www.nytimes.com/2015/11/29/business/international/chinese-cash-fl...
It strikes me that these investors, despite the strong proclivity of the Chinese to save substantial fractions of their income, must be in the top few percent of wage earners. A median-income Chinese worker, saving 30 percent of their income, is putting around $4000 a year away. But the people profiled in this article and the above article from November are moving millions.
The Gini coefficient in the US is .41; in China, the official estimate is also around .4, but Bloomberg reports independent estimates as high as .6. It's these Chinese "one percenters" that are moving the big money out.
http://www.nytimes.com/2015/11/29/business/international/chinese-cash-fl...
It strikes me that these investors, despite the strong proclivity of the Chinese to save substantial fractions of their income, must be in the top few percent of wage earners. A median-income Chinese worker, saving 30 percent of their income, is putting around $4000 a year away. But the people profiled in this article and the above article from November are moving millions.
The Gini coefficient in the US is .41; in China, the official estimate is also around .4, but Bloomberg reports independent estimates as high as .6. It's these Chinese "one percenters" that are moving the big money out.
7
"Chinese "one percenters""
I.E., the Communist Party members.
When the rest of the Chinese realize their own government officials are moving their ill begotten riches out of the country to buy multimillion dollar mansions in NYC, Toronto, Vancouver, LA and other places, all the while leaving them with no options (dead real estate market, stock market down 40%), imagine the anger then.
I.E., the Communist Party members.
When the rest of the Chinese realize their own government officials are moving their ill begotten riches out of the country to buy multimillion dollar mansions in NYC, Toronto, Vancouver, LA and other places, all the while leaving them with no options (dead real estate market, stock market down 40%), imagine the anger then.
6
The problem with your argument is that the GINI coefficient measures income, not asset ownership. Two anecdotes to help understand why income is irrelevant, whereas ownership is everything, and why it won't be just the 1% who are buying in the U.S.. 1) My Asian relatives sold a crumbling concrete apartment for $700K in 2010 which had been worth $20K two years before. This is not an exceptional appreciation, but typical. 2) I had some newly arrived Chinese grandparents who were cleaning my place in Silicon Valley, and I asked them how they could afford to move there. They had just sold a couple small properties in China and bought a place in Silicon Valley with the proceeds. Shortly afterwards, my landlord, a native of California and a U.S. government employee, evicted us (from our house and our school district), and sold our place to.... tourist visa immigrants from China. It's not income, it's assets, and they have more square ft. than we do, at a higher value.
8
Keep beating the dead horse, but it's fun to watch the speculators burn, Soros and his gang forgot he was taking on China, not Britain, he seems to have forgotten that the time he took down the Asian currency in 97 he got burned when he tried to take down the Hong Kong currency because China stepped in, Soros seems to believe he could drive down sentiment even further by perpetuating a fraud through a mass media campaign, now he along with his buddy investors are getting burned, China is doing a favor to the world right now.
4
The markets, Soros included, are assuming that the Chinese government ultimately will choose the welfare of the Chinese economy and people, over an adherence to an obsolete ideology. Perhaps Soros is wrong.
16
I have no idea if Soros and fellow speculators will profit by betting against the Yuan, but if they do, it's not because they have somehow managed to hurt the currency. Individual traders, even those playing with Billions, are marginal players. They saw something to profit from, so they are pressing their bets. It's possible the governments can manage the situation and prove these speculators wrong.
Either way, don't bother focusing on the speculators. Focus on the fundamentals and realities of the larger system they are betting against.
Either way, don't bother focusing on the speculators. Focus on the fundamentals and realities of the larger system they are betting against.
Capital flight from China is not about the exchange rate. It is about exchangeability itself, the fact that wealthy Chinese now have an easy means to move money out of the country, to escape the risk that is intrinsic to that economic system.
There is no going back on the exchangeability - it would be a huge narcissistic blow to the Chinese government. What must happen, and will happen, is that Chinese entrepreneurs will stop signing ghost contracts with ghost owners, backed by ghost government agencies. The sooner the Chinese government commits to the rule of law in business transactions in China, the sooner the capital flight will slow.
There is no going back on the exchangeability - it would be a huge narcissistic blow to the Chinese government. What must happen, and will happen, is that Chinese entrepreneurs will stop signing ghost contracts with ghost owners, backed by ghost government agencies. The sooner the Chinese government commits to the rule of law in business transactions in China, the sooner the capital flight will slow.
10
Yes and while countries like New Zealand, Australia and England have passed legislation curbing the flow of Chinese money into properties condemning their citizens to a lifetime of rental serfdom, Obama penned legislation making it easier than ever for Chinese to buy homes. With most other countries cut off from China now, you can bet the impacts of the Chinese buying properties in the US is going to be huge. Feel very sorry for those US citizens that have not been able to benefit from years of graft and corruption to make themselves billionaires because the average person is just not going to be able to compete with this tsunami of money for homes.
80
Per the Constitution, the President doesn't "pen" any legislation, ever. He can sign it or veto it, but it originates in the Congress, and must pass both houses to get to the President's desk. Think that Congress might have a wee bit of responsibility for any legislation making "it easier than ever for Chinese to buy homes"?
5
This is why we need a Republican President. Obama doesn't have the best interest in the American people.
3
So this means even more Chinese Communist Party members will launder their ill gotten gains by purchasing multimillion dollar Manhattan apartments all cash?
96
Some of them were extradited back to China on corruption charge. There is shortage on save heaven for the corrupted.
Maybe it's time to buy gems. In the 80s many a house in San Francisco was purchased with some cash plus a little velvet bag of diamonds.
8
And they are moving it into US real estate. Not so good for us, to say the least. Obama encouraged this unfortunately. There needs to be limits on non-residents purchase of real estate, particularly residential.
84
However the real estate values in the US are quite low by world standards and are still really in recession so the Chinese purchases aren't having that much effect compared to Chinese purchases of property in Canada , Australia and New Zealand.
2
Chinese money is pushing up the value of my property. As far as I am concerned, them buy as much as they want. It's a free country, at least unless Comrade Sanders gets elected.
1
That's right, it's always Obama's fault... Never mind that it has absolutely nothing to do with him and has been going on for decades.
1
They are welcome to bring money into NZ anytime, anyhow! lol! Our dollars from tourism are now more than from dairy exports.
6
I have visited NZ and it is heaven on earth!!!! You guys are very very lucky..
You deserve every tourism dollar!!!
You deserve every tourism dollar!!!
The devaluation of the RMB may have contributed to the money exodus from China but the major cause of this is the underlie instability of the political system. There is an old saying in the Chinese: “Thirty years on the east side of the river, thirty years on the west side of the river.” implies the political wind change when the leader change. The whimsical and capacious political wind drive the capital flight.
45
Rats deserting a sinking ship? No, just taking a break in another port.
2
The new moneyed class in China has always stealthly moved money out of China, with or without the devaluation of RMB. Average citizens have not done so in such hurry because they're looking at the domestic property market and stock market as if the only direction they can go, is up. That's why they've been pouring their savings and borrowings into those sectors. The stock market plunge, plus the depreciating property markets in various cities, had been bad in 2015, and the capital outflow from average Chinese will accelerate.
If Beijing had been able to engineer a stable and steadily rising economy, the Chinese would not have the need to flee, political system be damned. The adage from Bill Clinton still rings true, "it's the economy, stupid."
If Beijing had been able to engineer a stable and steadily rising economy, the Chinese would not have the need to flee, political system be damned. The adage from Bill Clinton still rings true, "it's the economy, stupid."
China is as reckless with its currency as our awkwardly ham-handed president is with the employment situation. If I had a hundred bucks' worth of yuans I'd take almost any other currency for them.
3
If the Beijing authorities clamp down on capital flight using capital controls and other stringent measures that further isolate the Chinese financial system from the rest of the world, I'm all for that. We don't want contagion caused by a collapsing Chinese bank or two to severely disrupt capital and credit markets in the U.S. and Europe through quick financial channels. There will be a sudden drop in global stock exchanges, but if the major Western banks remain relatively unscathed from this instability, that's the best case scenario we can have considering China's slowdown and possible economic unraveling.
I'm hoping for a similar scenario to what we saw in Japan in the early 1990s--a near collapse of the Japanese financial system was averted because the Japanese government refused to write off trillions in nonperforming loans on bank balance sheets (the infamous "zombie loans") and then allowed the Japanese economy to limp along into two decades of practically no growth. It destroyed Japan's mojo, but it caused little disruption to the greater global financial system. The same thing will hopefully happen in China--another "zombie loan" regime with low to very low growth rates in the coming decade or so. Though the big, unknown variable here is politics--unlike Japan, which had a stable democracy in the early 1990s, China has unpredictable and unstable politics. This is where uncertainty is high, in Beijing's political reaction to all of this.
I'm hoping for a similar scenario to what we saw in Japan in the early 1990s--a near collapse of the Japanese financial system was averted because the Japanese government refused to write off trillions in nonperforming loans on bank balance sheets (the infamous "zombie loans") and then allowed the Japanese economy to limp along into two decades of practically no growth. It destroyed Japan's mojo, but it caused little disruption to the greater global financial system. The same thing will hopefully happen in China--another "zombie loan" regime with low to very low growth rates in the coming decade or so. Though the big, unknown variable here is politics--unlike Japan, which had a stable democracy in the early 1990s, China has unpredictable and unstable politics. This is where uncertainty is high, in Beijing's political reaction to all of this.
56
Interestingly enough, the US has followed the Japanese model, by eliminating the cash-to-market requirement for the big banks [which would reveal the volatility in the value of bank shares] as well as suppressing the interest rates via the actions of the fed. That means that bank stocks are overvalued and we have stagnant economic growth.
The only reason there has been any growth in the US economy is that the oil and gas industries continued to invest and drove down energy costs, despite the unceasing efforts of the administration to drive up electricity costs. Now that the energy sector has cut back on investment, it is inevitable that we will head into a recession.
The only reason there has been any growth in the US economy is that the oil and gas industries continued to invest and drove down energy costs, despite the unceasing efforts of the administration to drive up electricity costs. Now that the energy sector has cut back on investment, it is inevitable that we will head into a recession.
By far the best way for anyone to currently get around capital controls is to purchase Bitcoin in country A, send it to country B, and sell it there for local currency.
6
Yeah, well, in China you might face a substantial penalty for early withdrawal. If you know what I mean.
Gosh, and just a couple of years ago the sky was falling because the renminbi was about to replace the dollar as the world's reserve currency.
51
"The Chinese leaders are great leaders. They are so much smarter than us. They are killing us. I know because I sold a condo to some Chinese people"
- unnamed Presidential aspirant
- unnamed Presidential aspirant
66
Sweet, Fran; Sweet!!!
Yes. All of the conservative economists were foaming at the mouth as to how the dollar was debased and would forever lose its position as the strongest and most stable currency.
Why are these jokers never called to task?
Why are they interviewed as being 'experts'?
Why do they get paid tens of millions of dollars in salaries?
Why are these jokers never called to task?
Why are they interviewed as being 'experts'?
Why do they get paid tens of millions of dollars in salaries?
2
if we are going to have a global economy - why have so many currencies?
and if we are going to have multiple currencies - why not have the economics people at the U.N. decide exchange rates on an annual basis?
and if we are going to have multiple currencies - why not have the economics people at the U.N. decide exchange rates on an annual basis?
Maybe they can hold the meeting at Bretton Woods?
19
You're right. Everyone should use Bitcoin.
1
Nobody trusts anyone else to have any impact at all on their currency, even if they are saying they support such globalist thinking.
It's just like with Congressmen - everyone says the whole lot of them need to go away BUT they are in LOVE with their own representatives.
Should Bernie win the White House and the House of Representatives, you'll have a trillion dollars a WEEK leaving the country for more trustworthy options.
It's just like with Congressmen - everyone says the whole lot of them need to go away BUT they are in LOVE with their own representatives.
Should Bernie win the White House and the House of Representatives, you'll have a trillion dollars a WEEK leaving the country for more trustworthy options.
4
Smartest thing for the Chinese to do is to buy gold. The dollar is likely as strong against world currencies as it will be for a long time. Any drop in the dollar will cause gold to rise. So buying gold with renminbi will protect against a drop in value in both currencies.
6
DMJ... CHINA already owns all the gold as every country around the globe is in major debt to CHINA.
4
Good idea--but gold is a lot harder to authenticate, store, secure, divide, and transport than Bitcoin.
3
Who is willing to sell gold for renminbi, and at what rate/discount?
Chinese economy slowed down only when compared to its former self. Compared to the rest of the word since 2008, Chinese economy is actually one of the most robust in the world. China, already one of the world's largest economy, arguably the largest in PPP terms, also has had a $400-600 trade surplus every year since 2008, which makes its currency inherently strong when compared to other currencies. China also still has $3 trillion plus Forex reserve and $21 trillion domestic deposits (compared to $11 trillion for the U.S.). The weakness of the Yuan is greatly exaggerated.
50
Good to hear from the propaganda arm of the Chinese totalitarian state for some balance - but those Chinese who are casting out their money as quickly as possible understand the real state of the Chinese economy not the Potemkin village the propagandists keep posting Iand which the Chinese bureaucracy kept building city and factory after empty city and factory and empty office buildings and coal power plants etc etc)
17
Geez I wish the the China Trade surplus was only $400-600!
1
Perhaps so, that is obviously what is debated here.
That said, how can you say that any currency is both inherently strong AND strong compared with other currencies?
Make up your mind!!
That said, how can you say that any currency is both inherently strong AND strong compared with other currencies?
Make up your mind!!
1
Another way Chinese are getting money out of their country -- they send it to their children in college here in the US "to pay tuition" but as they have already paid it the money is an overpayment that gets refunded to the student. Universities are becoming banks in these instances.
138
It's a way of laundering money. So is real estate. They wouldn't be able to do this in the banking system because of regulations. But real estate has no such prohibitions.
http://www.abc.net.au/news/2015-10-12/chinese-investors-flooding-billion...
http://www.abc.net.au/news/2015-10-12/chinese-investors-flooding-billion...
9
Yikes. This could make '07-'08 look like a picnic.
24
The same thing is going on in South Africa right now as the Rand tumbles and political instability increases. Oddly enough the Chinese are investing in Southern Africa big time.
44
What in the world was the IMF thinking when they recently added the Chinese Yuan to the standard basket of currencies if it's not even freely convertible?
66
If it is freely convertible, Wall Street bankers will earn tons of money by now.
2
The Chinese have been moving money out of China for many years. They have been buying high end properties in the UK and the US
13
"An anti-corruption drive, slowing growth and rising American interest rates are all partly to blame. "
The Economist, 4 weeks ago
So, US policy is part of the equation.
It's less that the Chinese lose confidence, it is more that paying little to now interest, is driving the outflow. A $ reserve of over 3 trillion, and the powers of the Chinese state to throttle the outflow at any time will keep the yuan out of trouble for a long time.
Add to this the enticing prospect to make money in currency speculation
"Many economists reckon China will allow the yuan to fall. After all, the currency has appreciated by 20% against a broad range of currencies since 2012 "
Capital flows like water, in a global economy - and in China, as long as the PRC leadership will allow it.
http://www.economist.com/news/finance-and-economics/21688440-chinas-lead...
The Economist, 4 weeks ago
So, US policy is part of the equation.
It's less that the Chinese lose confidence, it is more that paying little to now interest, is driving the outflow. A $ reserve of over 3 trillion, and the powers of the Chinese state to throttle the outflow at any time will keep the yuan out of trouble for a long time.
Add to this the enticing prospect to make money in currency speculation
"Many economists reckon China will allow the yuan to fall. After all, the currency has appreciated by 20% against a broad range of currencies since 2012 "
Capital flows like water, in a global economy - and in China, as long as the PRC leadership will allow it.
http://www.economist.com/news/finance-and-economics/21688440-chinas-lead...
2
That's a lot of real estate that American and Canadian millennials will be priced out of, yet we hear nothing during election season about this