- Affluent Chinese families are looking for ways to send their money abroad as the mainland’s economy faces some turmoil
- Chinese buyers have become the dominant market force purchasing luxury apartments in Tokyo, and numbers are rising elsewhere as well
- A report shows that wealthy families are becoming creative in their methods of moving investments across borders
Cash-strapped Chinese citizens have moved hundreds of billions of dollars out of the country this year, tying up the money in investments such as foreign real estate and gold bars.
According to a New York Times reportWealthy Chinese citizens invest their savings in foreign apartments, stocks and bank accounts.
China’s upper middle class has spent millions on apartments in Tokyo, London and New York. Foreign bank accounts that pay higher interest rates have also become a popular landing spot for Chinese dollars.
China has maintained extremely strict border controls since the outbreak of the COVID-19 pandemic in 2019.
Private investors deciding to send their money out of the country may reflect continued unease about China’s economy as it slowly recovers from the pandemic.
In particular, the country has seen a palpable slowdown in the real estate market, a place where many wealthy Chinese families stored much of their capital.
Some Chinese have bought gold bars small enough to be spread in their carry-on luggage to smuggle money out of the country
Other wealthy residents spend millions on luxury apartments in foreign markets
The Times suggests the outflow of money could also be a response caused by fears about the direction of China’s economy under the thumb of President Xi Jinping, who has introduced tighter government controls on business and other parts of life.
To get around some of those stricter controls on leaving China, the outlet reports that some Chinese have purchased small gold bars, small enough to be thrown into a carry-on bag without notice.
For this reason, the price of gold in China is rising.
Luxury apartments in foreign markets are another option for people moving money abroad.
According to the Times, Chinese have become the main buyers of Tokyo apartments costing more than $3 million. They are often paid in cash.
One real estate professional said, “It’s really hard work to count this kind of cash.”
Chinese homebuyers were also responsible in the US 13 percent of all foreign buyers last year – a number that is still lower than pre-pandemic figures but has more than doubled since 2021.
This year, about $50 billion a month has been siphoned out of China, mostly by private households and businesses.
The country’s economy is so huge that even these numbers don’t really pose a threat, but the outflow of capital has devalued the Chinese currency, which could eventually become a problem.
The Chinese renminbi is currently the weakest in sixteen years. Eight years ago, the Chinese government was forced to spend around $100 billion a month to maintain the currency’s value, following a mass exodus of Chinese currency from the domestic market.
Currently, the government has spent about $15 billion to do the same.
Chinese are still looking for ways to exchange their local currency for US dollars and in some cases have resorted to casino gaming
Mainland residents have also started opening bank accounts in Hong Kong in large numbers and transferring money to them to buy insurance products that function similarly to bank deposits.
The massive amount of capital flowing out of China has not yet damaged the US$17 trillion economy, but if this pattern continues, the government could face a challenge in stabilizing the renminbi.
Chinese are still looking for ways to exchange their local currency for US dollars and in some cases have resorted to casino gaming.
Although the government has relegated almost all gambling tours to Macau, a Chinese territory with a different standard of governance, individuals still hope to win chips that they can exchange for USD.
Mainland residents have also started opening bank accounts in Hong Kong in large numbers and transferring money to them to buy insurance products that function similarly to bank deposits.
Families are pouring tens of thousands of dollars into the accounts in the hope that their savings will be better protected from Chinese soil.