5 ms·

This story is playing out all over the world. A while ago, the Chinese figured out that by pegging their money to the USD they could simply print more money, p

by o0-0o 11y ago

This story is playing out all over the world. A while ago, the Chinese figured out that by pegging their money to the USD they could simply print more money, pay people more, and their citizens would flourish. It's a great strategy if you're an up and coming solution. Unfortunately, the ending has played out before. Crash and burn. With the burn part being a bloody conflict or war.

zhte415 11y ago
> the Chinese figured out that by pegging their money to the USD they could simply print more money, pay people more, and their citizens would flourish This isn't correct. By maintaining a low exchange rate, people were paid less (the government acquired debt in lieu of a higher exchange rate) resulting in China (the people in China) having a lower international purchasing power. Wealth would have no doubt similarly been accumulated by those that owned the factors of production, but a lower exchange rate deflated China's, and it's citizens', purchasing power, from foreign holidays to domestic essentials, such as oil, and even the price of corn, beans and rice (produced domestically, but prices set largely by international demand). Why? The government was petrified by unemployment. Closing down government enterprises meant people had to be employed somewhere. Better to have someone working hard all day providing for their family and seeing economic progress (obstensively the East of the country) than back on the farm with too much spare time. Something different is happening now - from my perspective the East is 'developed enough' and bitterly complaining about pollution. The inner regions, comparatively much poorer, complain about lack of wealth more than pollution - so move some production there (despite significantly increased logistics costs), mainly for the now much larger domestic market, and let development in the East slow (or, slightly, contract - cool the bubble that does exist). For housing costs - surely things like the EB-5, which for a modest investment can grant a green card for you and your family are a major driving factor.
- seanmcdirmid 11y ago
  Better to see someone working hard to provide for their family than with enough time to protest inequality or otherwise take interest in their political fate. The main issue is that wealth is very unequal in China. That low level official making 5k rmb/month is pulling in 20, 30, 40k rmb in grey money. They have to stash it somewhere, and overseas is safer when the government can make you an example at any moment. Also, there are so few investment option in the mainland that if you do have money even from purely legit sources, buying a house overseas is probably much more sane than investing in extremely bubbly local real estate or stocks.
  - olalonde 11y ago
    Plus, many Chinese cities have caps on the number of apartments one family can buy.
    - seanmcdirmid 11y ago
      Those caps went away quickly as soon as the market showed a little bit of weakness. I think they only remain in Shanghai and Beijing, and even then.... A lot of apartments are owned and vacant even in first tier cities; rents are incredibly weak compared to sale prices. I pay 7500 rmb/month ($1100?) for something that would go on the market for $700k! Top that off, volume in 2nd hand real estate is pretty low even here in Beijing (you hear "I would sell one of my apartments, but no one would buy it for the price I want" - doh!).
spacecowboy_lon 11y ago
yep a lot of the property is brought as a safe guard against the the day when the mob starts hanging people from lampposts. Also I suspect lack of trust in the local stockmarket might have something to do with it.
- olalonde 11y ago
  > yep a lot of the property is brought as a safe guard against the the day when the mob starts hanging people from lampposts. Do you have any evidence to back that up or are you just making it up? I'd personally be surprised if it has even crossed the mind of some of them. More likely, the Chinese are buying US properties because they are cheap and can be rented for profit.
  - dharma1 11y ago
    Not saying there will be a mob but the Chinese stock market is heating up to the point where companies are stopping manufacturing and using their assets to buy stocks instead. And the level of unserviced debt is getting high, but the central bank prefers to have the lenders rolling it over rather than letting defaults be triggered. So buying property abroad would make sense for those Chinese who can afford it in terms of diversifying their investments as well as having a back door out of the country if it things go sour. https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCEQqQIwAA&url=http%3A%2F%2Fwww.wsj.com%2Farticles%2Fchinese-firms-put-cash-to-work-in-stocks-1434463023&ei=NMGCVd-FJcbyUu7NgNgK&usg=AFQjCNFHBFVJJXvUjU9_XQu7FeXVEn8mfA https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web...
    - olalonde 11y ago
      Agreed. I guess I might have taken parent's comment too literally. I'm just tired to see the inevitable and often gratuitous China-bashing in those types of submissions.
  - spacecowboy_lon 11y ago
    I was speaking mostly metaphorically but... You don't think some of the Cadres saw what happened to Nicolai Chauchesku and think that if it went really bad that that could be them. Remember that within living memory China has had extended periods of almost anarchy.
dummy7953 11y ago
Time for China's own class of corporate criminals to get outta Dodge before the 粪 hits the 风扇. It's so much easier to cook the books when the economy is hot, but when money gets tight, there's no hiding place. I predict addresses of new US homes will contain at least one number 8. Also, it helps America. The middle class can't buy homes any more, so it's nice we can import a new group of rich people. That way we can keep playing games in the real estate and mortgage markets.

by o0-0o 11y ago

zhte415 11y ago

> the Chinese figured out that by pegging their money to the USD they could simply print more money, pay people more, and their citizens would flourish This isn't correct. By maintaining a low exchange rate, people were paid less (the government acquired debt in lieu of a higher exchange rate) resulting in China (the people in China) having a lower international purchasing power. Wealth would have no doubt similarly been accumulated by those that owned the factors of production, but a lower exchange rate deflated China's, and it's citizens', purchasing power, from foreign holidays to domestic essentials, such as oil, and even the price of corn, beans and rice (produced domestically, but prices set largely by international demand). Why? The government was petrified by unemployment. Closing down government enterprises meant people had to be employed somewhere. Better to have someone working hard all day providing for their family and seeing economic progress (obstensively the East of the country) than back on the farm with too much spare time. Something different is happening now - from my perspective the East is 'developed enough' and bitterly complaining about pollution. The inner regions, comparatively much poorer, complain about lack of wealth more than pollution - so move some production there (despite significantly increased logistics costs), mainly for the now much larger domestic market, and let development in the East slow (or, slightly, contract - cool the bubble that does exist). For housing costs - surely things like the EB-5, which for a modest investment can grant a green card for you and your family are a major driving factor.

seanmcdirmid 11y ago
Better to see someone working hard to provide for their family than with enough time to protest inequality or otherwise take interest in their political fate. The main issue is that wealth is very unequal in China. That low level official making 5k rmb/month is pulling in 20, 30, 40k rmb in grey money. They have to stash it somewhere, and overseas is safer when the government can make you an example at any moment. Also, there are so few investment option in the mainland that if you do have money even from purely legit sources, buying a house overseas is probably much more sane than investing in extremely bubbly local real estate or stocks.
- olalonde 11y ago
  Plus, many Chinese cities have caps on the number of apartments one family can buy.
  - seanmcdirmid 11y ago
    Those caps went away quickly as soon as the market showed a little bit of weakness. I think they only remain in Shanghai and Beijing, and even then.... A lot of apartments are owned and vacant even in first tier cities; rents are incredibly weak compared to sale prices. I pay 7500 rmb/month ($1100?) for something that would go on the market for $700k! Top that off, volume in 2nd hand real estate is pretty low even here in Beijing (you hear "I would sell one of my apartments, but no one would buy it for the price I want" - doh!).

spacecowboy_lon 11y ago

yep a lot of the property is brought as a safe guard against the the day when the mob starts hanging people from lampposts. Also I suspect lack of trust in the local stockmarket might have something to do with it.

olalonde 11y ago
> yep a lot of the property is brought as a safe guard against the the day when the mob starts hanging people from lampposts. Do you have any evidence to back that up or are you just making it up? I'd personally be surprised if it has even crossed the mind of some of them. More likely, the Chinese are buying US properties because they are cheap and can be rented for profit.
- dharma1 11y ago
  Not saying there will be a mob but the Chinese stock market is heating up to the point where companies are stopping manufacturing and using their assets to buy stocks instead. And the level of unserviced debt is getting high, but the central bank prefers to have the lenders rolling it over rather than letting defaults be triggered. So buying property abroad would make sense for those Chinese who can afford it in terms of diversifying their investments as well as having a back door out of the country if it things go sour. https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCEQqQIwAA&url=http%3A%2F%2Fwww.wsj.com%2Farticles%2Fchinese-firms-put-cash-to-work-in-stocks-1434463023&ei=NMGCVd-FJcbyUu7NgNgK&usg=AFQjCNFHBFVJJXvUjU9_XQu7FeXVEn8mfA https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web...
  - olalonde 11y ago
    Agreed. I guess I might have taken parent's comment too literally. I'm just tired to see the inevitable and often gratuitous China-bashing in those types of submissions.
- spacecowboy_lon 11y ago
  I was speaking mostly metaphorically but... You don't think some of the Cadres saw what happened to Nicolai Chauchesku and think that if it went really bad that that could be them. Remember that within living memory China has had extended periods of almost anarchy.

dummy7953 11y ago

Time for China's own class of corporate criminals to get outta Dodge before the 粪 hits the 风扇. It's so much easier to cook the books when the economy is hot, but when money gets tight, there's no hiding place. I predict addresses of new US homes will contain at least one number 8. Also, it helps America. The middle class can't buy homes any more, so it's nice we can import a new group of rich people. That way we can keep playing games in the real estate and mortgage markets.