5 ms·

What's wrong with keeping the proceeds in China?

kspaans 10y ago
From the article: China also has something called “grey” income, which means income earned (or acquired off the books) in China that is not reported on income taxes and that is held by its richest families. If the money can be laundered by buying a house overseas, grey becomes green!
- eternalban 10y ago
  How is it "held"? I've seen reports of raids where they find houses stuffed full of cash, but how do you get $2T in cash to Canada? At some point this is getting converted to electronic funds and that is where the "laundering" is happening. As to why they are buying hard assets in Anglo-sphere, possibly because they are worried that the said Anglos may pull the plug on the fiat currency in a Great Reset at some point in the near future. I guess the silver lining here is that the Chinese corrupt set are bullish on the continuity of rule of law over here.
  - afterburner 10y ago
    HSBC is complicit in laundering the money. They have been fined to that effect, but I doubt it's curtailed their activities much. I'm sure many other banks do the same.
  - querulous 10y ago
    if you know the right people and can stomach hours and hours in the cheapest seats on transpacific flights you can make $2k a week flying between beijing and vancouver
  - webmaven 10y ago
    > how do you get $2T in cash to Canada? Shipping containers?
    - angry_octet 10y ago
      Try wire transfers. Eg Their factory needed a container full of Danish ball bearings. They paid the overseas supplier. Maybe there was an actual container (in which case it was re-sold overseas) and maybe there wasn't. May e an actual container of bearings arrived in China.
JumpCrisscross 10y ago
Same problem with keeping money in Russia--political and financial capital are one and the same. Consider Khodorkovsky [1]. [1] https://en.m.wikipedia.org/wiki/Mikhail_Khodorkovsky https://en.m.wikipedia.org/wiki/Mikhail_Khodorkovsky
AlexCoventry 10y ago
Holding the proceeds of theft from a government in the government's currency is like lending the loot from a mugging back to the victim. The PRC can't freeze funds held in US dollars.
uiri 10y ago
It needs to be invested. Chinese cultural attitudes around investing tend to favour real estate. Chinese real estate is too risky given the communist government's propensity for eminent domain and the possibility that they would confiscate it on the basis of corruption. That leaves foreign real estate in countries perceived to have sound government, rule of law and low barriers to entry for foreign investors.
coupdejarnac 10y ago
Rule by law. Reasons for moving money and children abroad: diversification of investments, security, prestige, less pollution, schools. Source: dated wealthy Chinese women.
afterburner 10y ago
Developed countries are a safer investment. And the standard of living is higher.
nradov 10y ago
In many parts of China it's effectively impossible to actually purchase residential real estate. Buyers actually only get a 70-year lease (could vary up or down) which is pointless if you want to preserve wealth for your descendants.
seanmcdirmid 10y ago
The Chinese government/people might want it back.

From the article: China also has something called “grey” income, which means income earned (or acquired off the books) in China that is not reported on income taxes and that is held by its richest families. If the money can be laundered by buying a house overseas, grey becomes green!

eternalban 10y ago
How is it "held"? I've seen reports of raids where they find houses stuffed full of cash, but how do you get $2T in cash to Canada? At some point this is getting converted to electronic funds and that is where the "laundering" is happening. As to why they are buying hard assets in Anglo-sphere, possibly because they are worried that the said Anglos may pull the plug on the fiat currency in a Great Reset at some point in the near future. I guess the silver lining here is that the Chinese corrupt set are bullish on the continuity of rule of law over here.
- afterburner 10y ago
  HSBC is complicit in laundering the money. They have been fined to that effect, but I doubt it's curtailed their activities much. I'm sure many other banks do the same.
- querulous 10y ago
  if you know the right people and can stomach hours and hours in the cheapest seats on transpacific flights you can make $2k a week flying between beijing and vancouver
- webmaven 10y ago
  > how do you get $2T in cash to Canada? Shipping containers?
  - angry_octet 10y ago
    Try wire transfers. Eg Their factory needed a container full of Danish ball bearings. They paid the overseas supplier. Maybe there was an actual container (in which case it was re-sold overseas) and maybe there wasn't. May e an actual container of bearings arrived in China.

JumpCrisscross 10y ago

Same problem with keeping money in Russia--political and financial capital are one and the same. Consider Khodorkovsky [1]. [1] https://en.m.wikipedia.org/wiki/Mikhail_Khodorkovsky https://en.m.wikipedia.org/wiki/Mikhail_Khodorkovsky

AlexCoventry 10y ago

Holding the proceeds of theft from a government in the government's currency is like lending the loot from a mugging back to the victim. The PRC can't freeze funds held in US dollars.

uiri 10y ago

It needs to be invested. Chinese cultural attitudes around investing tend to favour real estate. Chinese real estate is too risky given the communist government's propensity for eminent domain and the possibility that they would confiscate it on the basis of corruption. That leaves foreign real estate in countries perceived to have sound government, rule of law and low barriers to entry for foreign investors.

coupdejarnac 10y ago

Rule by law. Reasons for moving money and children abroad: diversification of investments, security, prestige, less pollution, schools. Source: dated wealthy Chinese women.

afterburner 10y ago

Developed countries are a safer investment. And the standard of living is higher.

nradov 10y ago

In many parts of China it's effectively impossible to actually purchase residential real estate. Buyers actually only get a 70-year lease (could vary up or down) which is pointless if you want to preserve wealth for your descendants.

seanmcdirmid 10y ago

The Chinese government/people might want it back.