CHINA POLITICS: Chinese Money Leaking Into the World’s Housing Markets?

Kate Harveston
By Kate Harveston October 10, 2017 16:28

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At this potent political moment, China — recently under increased scrutiny thanks to political rhetoric as well as political realities — is expressing its nationalism by cracking down on the “leak” of Chinese money out of the country. It’s not precisely the same kind of tribalistic, lines-in-the-sand economics practiced by the Alt Right in America, which is still wasting its time pining for jobs that aren’t coming back to America. Rather, China wants to be sure that those of its citizens with the independent means to invest do so within the country’s borders.

Continue below with the full current political topic.

CHINA POLITICS: Chinese Money Leaking Into the World’s Housing Markets?

In some ways, the learning curve of globalization has been obvious. We see it in our Donald Trumps, our Nigel Farages and our Brexits. In other ways, the brave new world of intercontinental citizenship and commerce manifests much differently.

At this potent political moment, China — recently under increased scrutiny thanks to political rhetoric as well as political realities — is expressing its nationalism by cracking down on the “leak” of Chinese money out of the country. It’s not precisely the same kind of tribalistic, lines-in-the-sand economics practiced by the Alt Right in America, which is still wasting its time pining for jobs that aren’t coming back to America. Rather, China wants to be sure that those of its citizens with the independent means to invest do so within the country’s borders.

It makes sense. It’s also mostly useless. As a number of recent revelations can confirm, Chinese citizens who wish to invest overseas can usually find the means to do so. And over here in the States, that’s caused some concern for the housing market.

Is China Planting Flags?
The trend we’re discussing today has already caused something of a mild taxing crisis in Australia: Chinese real estate investors are maintaining “ghost properties” overseas to corner the housing market and raise prices.

As of 2017, Chinese investors are not allowed to export more than the equivalent of fifty-thousand U.S. dollars beyond China’s borders and they aren’t permitted to use it for real estate. Interested parties can take part in any number of shady practices to move the money anyway, but the goal of the effort remains: curb the rising costs of real estate caused by these shadowy investments made from afar.

Australia, Canada and England have all seen real estate prices rise commensurately with the peak outpouring of foreign capital into their respective housing markets. In America, the Chinese have spent five years atop the list of foreign interests buying U.S. homes.

By March of 2017, Chinese spending on American residential homes had reached a new high of almost  $32 billion.

If the Chinese government doesn’t want this money flowing between borders and Americans would rather not have foreign investments artificially inflate the price of a home they otherwise could have bought — why is this happening?

One of the more futuristic headlines out of China recently saw the Pacific nation literally raising brand-new islands out in the ocean to claim as their own. China thinks there’s a land rush on — and they’re right. Everywhere you look, companies and corporations are buying up properties at a rate which appears to outstrip property purchases made by individuals. In America, more folks are renting today than at any point in the past 50 years.

And Democrats and Republicans still can’t agree on what’s best for young Americans who want to strike out on their own, buy property and follow the road toward the American Dream. Within moments of President Forty-Five being sworn in, the administration had already made a move which seemingly made home-buying a more expensive prospect for young Americans.

Letting Obama-era reductions in home insurance premiums expire sounds like a bad idea, as Democrats were quick to point out. But others said the Democrats had it wrong, claiming the party hadn’t learned enough lessons from the last housing bubble disaster, where the problem was caused by selling homes to folks who weren’t financially ready. Income-restricted apartment housing and other solutions already fill that gap for many folks who aren’t ready to buy, after all. Which party has the right of it right now? Who can say. The point today is that “ghost properties” aren’t doing anything to clarify the situation for Americans who want to own property of their own.

And here’s one more detail in case your thought your grasp on this situation wasn’t tenuous enough: data from 2017 suggests Canada has overtaken China when it comes to property purchases in America. Now that China is more aggressively controlling the flow of money out of its borders, we have a new boogeyman to worry about.

Real Estate Chaos and the Future of Planetwide Commerce

Yep — the international real estate market is in apparent chaos right now. But here’s the good news:

Properties change hands all the time. If one foreign investor can purchase an American property, an American interest can just as easily purchase it back. But the worry for any investment concern is having all of your proverbial eggs in the same basket. In this case, some business owners in China find themselves worrying the country’s long march toward economic significance on the world stage could stall or collapse, leaving a ruined real estate market in its wake. Diversifying by seeking out foreign properties is only natural.

But now that the intentions of the Chinese real estate investment market have made themselves felt all over the world, we encounter yet another wrinkle: cracking down even harder on this money leaving Chinese shores could do more harm than good — sending prices tumbling instead of the steady climb we’ve already seen. In other words, the damage could already be done. We could already be living in a thoroughly multi-continental real estate market. And yeah — things might never be the same.

And yes, for right now, it’s a little worrying. With American politics fully engulfed by meaninglessness, America stand little chance of instituting policies which actually help young professionals and not-yet-established families buy their first home. The aforementioned Australia and Canada are also attempting to find the impossible balance between globalized commerce and looking out for their own citizens. A new normal is certain to emerge, but right now it’s anybody’s guess what that might look like.


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Kate Harveston

Kate Harveston

Political Journalist & Blogger at Only Slightly Biased
The Profile:

Kate Harveston is a young writer with a passion for politics. She holds a Bachelors in English and minored in Criminal Justice, so she is interested in anything examining law, politics and culture. Kate is a regular contributor at International Policy Digest, Greentumble, Feminist Wednesday, HelloFlo and The Liberty Project. Her work has also been featured on Bust, The Moderate Voice, Feminist Current and Ordinary Times. If you would like to follow her writing, you can visit her blog: http://onlyslightlybiased.com.

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Kate Harveston
By Kate Harveston October 10, 2017 16:28

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There are more readers worldwide reading the Politicoscope daily news content than ever before. Unlike many other news media organisations that charge their readers subscription fees for the same daily news content and features we offer you for free, we do not charge all our readers to pay any fee. We depend on online advertising to generate the revenues to fund all these great news content and exclusive features provided to you for free. Currently, advertising revenues are quickly falling which is affecting our ability to offer you free online news content.
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