Chinese retreat from Australian property as capital controls bite

Not a bad time to make the change . Sydney is close to top and where we bought " ( Port Stephens , north side ) , has moved , but no where near as much as Sydney.

Maybe around 20-30 %

Though not much stock and we've seen that drop a lot in the last few months .

Cliff

 

There's a massive loophole with that policy...

So basically it is able to detect something like this:

Account 1 transfer 50k to Aus Account A
Account 2 transfer 50k to Aus Account A
Account 3 transfer 50k to Aus Account A
Account 4 transfer 50k to Aus Account A

Aus Account A gets 200k within 90days, which is picked up

The problem with this is you can easily sidestep it by using multiple Australian accounts to receive the money. Now that could be multiple family members in Australia or even trusted friends. Heck, I reckon the same person could just open multiple accounts with different institutions and go undetected

Example:
Account 1 transfer 50k to Aus Account A
Account 2 transfer 50k to Aus Account A
Account 3 transfer 50k to Aus Account B
Account 4 transfer 50k to Aus Account B

Big fail of a policy IMO

 

China gov has a whole department dedicated to monitoring and censorship of the internets. Their banks likely have the same technology to track all electronic financial transactions and know exactly who is transferring what to who and where. There is probably some cooperation between china/aus banks going on as well.

Everything is state controlled over there in commie land. Policy big fail or not we will find out pretty quickly in the coming months.

 

Yes I agree, so shall we expect to see some property forced to put back on the market due to Joe Hockey deadline until 1 November 2015 to declare the illegally purchased existing property by foreigner.

"Under the new legislation suggested to be introduced on the 1st of November 2015, owners who have illegally purchased property in Australia will be given an government amnesty and will not be prosecuted, if they voluntarily come forward prior to the 1st November"​

http://www.whocrashedtheeconomy.com.au/blog/category/foreign-investment-review-board/

 

The Chinese are resourceful!

 

It definitely is still doable. Over the last few months I’ve heard stuff like this still going on:

- False invoicing with inflated import prices and reduced export prices
- A guy selling Chinese goods on eBay setting up a relative in Aus to receive payments here
- Cash carried on behalf of others by airlines personnel travelling abroad
- Getting official approval for an investment venture abroad and using the money for something else
- Underground money changers still doing a roaring trade.

A corrupt official is caught, another one takes his place who does it better.

 

Getting money out is never hard. More importantly, the question is will they get out...

China's a strange place. If it's doing very well, they actually won't invest in Aus, because it's easier to make money in China. What's 30% growth when they triple their money in a few months? Obviously if things are really tough, they may not have money to invest in Aus.

The sweet spot is somewhere in between.

 

Don't forget the 'fei chien' method (known as Hawala in Pakistan/india).

A wants to send money from Sydney to China.
B wants to send money from China to Sydney.

A swap is arranged in country and no banking service is used.

There are little shops in Australia offering this service to nearly all countries.

 

You’re absolutely right if they’re doing it for pure business reasons. But money fleeing China isn’t necessarily for investment. In fact most of it isn’t. Motivations include: wealth preservation, wealth concealment, geographical diversification, money laundering, preparing to move abroad, maintenance of family abroad, etc... That’s why they accept to pay such exceedingly high fees that no normal investor would.

It’s true that if the Chinese economy hits trouble there will be less money going around. However my observation is that China has already gone into slow mode for several years now. Growth is probably half of what’s reported. And that hasn’t reduced capital flight at all, rather it has put a rocket under it as doubt and confusion increase.

Figures I've read somewhere show that capital flight increased dramatically until 2008, subsided from 2008 to 14 then exploded again from 2014, about the time the anti-corruption crackdown took hold. So it appears to be more related with what happens on the corruption front than the economic front.

This may be worth a read:
Has China's 'hard landing' already happened?

 

Yes, they do have a department monitoring the Internet. Having lived in China for long periods, I have been shown by those living there how easy it is to get around these controls. I personally have not resorted to these methods but have seen first hand how it's done.

 

Chinese acquaintances are saying moving money out has been much harder since the start of this year. Getting nervous as their OTP will settle soon.

Anyway, pink diamonds are the new trend! Main attraction is buyer identification not required.

Australia considers tighter anti-money laundering rules for real estate, gems

 

I also know some Chinese acquaintances are struggling to get the money out. Not sure why do some people still think it is not hard.

 

Booming housing market increasingly a target for drug money launderers, say police

Perhaps this link can give you all better understanding

 

Hmmm...money launders and ordinary people are different. I thought this post originally was not about money launders.

 

Even though the government is tightening fund flowing overseas, there is a way to do it without having their actual fund to leave the country, as explained in the article.

 

Yes, there is a way but the question is apart from the money launders, will the ordinary people take the risk to do that? If the answer is yes, why do some Chinese acquaintances told me it is actually hard? In addition, I have read news recently that increasing numbers of "remittance agents" have been caught by Chinese gov.

 

@Kai41314 i think you might have misunderstood the article. Some of these are ordinary people with genuine business with no intention of laundering their money who simply want to use the service of these legitimate agents because of better exchange rate, and no transfer charges. However with recent property boom, drug dealers in Australia are taking this opportunity to launder their money through these remittance agents.

These agents, even though quite common, not everyone knows about it. Your acquaintance might not aware of it.

 

As to the retreat of Chinese or Asian buyers, I personally think that it's caused by the economy slowdown. I am dreading what is currently happening in Asia hence impacting Australia. I think we should all be prepared.

 

You don’t need to be money launderers to use shady methods. Some of them are so widespread that they’re almost mainstream now.

One good example is people whose money is legit but who try to keep a low profile in the current turmoil. They're prepared to go to extremes to hide their wealth around.

In fact I sense quite a bit of uneasiness around the current anti-corruption campaign. When people are being shamed on TV confessing to alleged corrupt behaviour, insulted for having affluent lifestyles, when the moral brigade can destroy someone’s life only on hearsay, when ultra-nationalism and political purity are glorified... it’s all reminiscent of bygone days under Mao’s Cultural Revolution. People are getting nervous as they try to figure out the real motives behind the official slogans.

So we end up with this paradox: the CCP has never been as strong as now and yet people worry a lot about how they’re going to be affected by political instability. Extreme capital flight is only a symptom of this.

Here in the West we tend to give purely economic explanations for economic situations. Not so in China. Case in point is their sharemarket whose rise and fall is mostly caused by political considerations.

 

Here is an interesting article related to this discussion:
Billionaire scores free first-class flights, forever

It is interesting for 2 reasons - one that he made a US$170 million purchase on his Amex card. But secondly that this is a way for Chinese people to potentially get money out of the country.


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