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I'm surprised nobody's brought up the US real estate market parallels. Arguably China is already in a position to exert significant influence over multiple mark

by 1_2__4 9y ago

I'm surprised nobody's brought up the US real estate market parallels. Arguably China is already in a position to exert significant influence over multiple markets in the US with nothing more than threats - real or implied - of enacting currency controls. Entire markets - if not the entire RE market in the US - would collapse overnight if China decided to prohibit the free flow of money into US properties.

rajup 9y ago
They already do so.
chibg10 9y ago
Arguably the main focus Chinese economic policy over the past year or so has been to close loopholes in the existing (strict) controls to prevent capital from leaving the country. The RE markets aren't collapsing.
deleted 9y ago
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adventured 9y ago
> if not the entire RE market in the US - would collapse overnight if China decided to prohibit the free flow of money into US properties. That's a comical extreme exaggeration. China has a minuscule share of and influence on the US real-estate market overall, including all of its metros. They have a several hundred billion dollar position in a hundred trillion dollar total market. They've only begun to have big influence in one city - Seattle (Amazon by itself has several times the real-estate influence that China does on Seattle). Much like Vancouver's real-estate market didn't collapse once the Chinese money stopped flowing in so easily, nor would Seattle's market. Further, most of China's real-estate influence is on a small segment of the higher end part of the market, from the capital flight of wealthier Chinese. All of that Chinese capital flight has already slowed dramatically due to capital controls. And yet, US real-estate isn't having a problem at all (quite the opposite). Japan had a dramatically greater position in US real-estate in the late 1980s. Guess what didn't happen when Japan started pulling its capital out of US real-estate? You guessed it, US real-estate didn't collapse at all. In fact, it did just fine from 1992 to 2000. The huge problems Japan's economy had, resulted in a small twitch in the US real-estate market, which is exactly what would happen with China.
- seanmcdirmid 9y ago
  In some RE markets Chinese money is influential, but definitely not in all. If you don't remember, Japan tanking coincided with the S&L crisis, SF and LA real estate took almost a decade to recover.

by 1_2__4 9y ago

rajup 9y ago

They already do so.

chibg10 9y ago

Arguably the main focus Chinese economic policy over the past year or so has been to close loopholes in the existing (strict) controls to prevent capital from leaving the country. The RE markets aren't collapsing.

deleted 9y ago

[deleted]

adventured 9y ago

> if not the entire RE market in the US - would collapse overnight if China decided to prohibit the free flow of money into US properties. That's a comical extreme exaggeration. China has a minuscule share of and influence on the US real-estate market overall, including all of its metros. They have a several hundred billion dollar position in a hundred trillion dollar total market. They've only begun to have big influence in one city - Seattle (Amazon by itself has several times the real-estate influence that China does on Seattle). Much like Vancouver's real-estate market didn't collapse once the Chinese money stopped flowing in so easily, nor would Seattle's market. Further, most of China's real-estate influence is on a small segment of the higher end part of the market, from the capital flight of wealthier Chinese. All of that Chinese capital flight has already slowed dramatically due to capital controls. And yet, US real-estate isn't having a problem at all (quite the opposite). Japan had a dramatically greater position in US real-estate in the late 1980s. Guess what didn't happen when Japan started pulling its capital out of US real-estate? You guessed it, US real-estate didn't collapse at all. In fact, it did just fine from 1992 to 2000. The huge problems Japan's economy had, resulted in a small twitch in the US real-estate market, which is exactly what would happen with China.

seanmcdirmid 9y ago
In some RE markets Chinese money is influential, but definitely not in all. If you don't remember, Japan tanking coincided with the S&L crisis, SF and LA real estate took almost a decade to recover.