Gold bars, Tokyo apartments
How $50 billion each month has been taken out of China this year despite restrictions
SHANGHAI — Affluent Chinese have moved hundreds of billions of dollars out of the country this year, seizing on the end of COVID-19 precautions that had almost completely sealed China’s borders for nearly three years.
They are using their savings to buy overseas apartments, stocks and insurance policies. Able to fly again to Tokyo, London and New York, Chinese travelers have bought apartments in Japan and poured money into accounts in the United States or Europe that pay higher interest than in China, where rates are low and falling.
The outbound shift of money in part indicates unease inside China about the sputtering recovery after the pandemic as well as deeper problems, like an alarming slowdown in real estate, the main storehouse of wealth for families. For some people, it is also a reaction to fears about the direction of the economy under China’s leader, Xi
Jinping, who has cracked down on business and strengthened the government’s hand in many aspects of society.
In some cases, Chinese people are improvising to get around China’s strict government controls on transferring money overseas. They have bought gold bars small enough to be scattered unobtrusively in carry-on luggage, as well as large stacks of foreign currency.
Real estate is an option too. Chinese have emerged as the main buyers of Tokyo apartments costing $3 million or more, and they often pay with suitcases of cash, said Zhao Jie, CEO of Shenjumiaosuan, an online real-estate-listing service in Tokyo.
Before the pandemic, he said, Chinese buyers typically bought Tokyo studio apartments for $330,000 or less to rent out. Now they are buying much larger units and obtaining investment visas to relocate their families.
All told, an estimated $50 billion a month has been taken out of China this year, mainly by Chinese households and private-sector companies.
Experts said the pace of money leaving China probably did not pose an imminent risk to the country’s $17 trillion economy, in large part because exports of many of the country’s key manufactured goods are strong, returning a steady stream of cash.
A broader move by families to send their savings elsewhere could be cause for alarm. Large-scale money outflows have set off financial crises in recent decades in Latin America, Southeast Asia and even China, in late 2015 and early 2016.
So far, the Chinese government is indicating that it believes it has the situation under control. Money sluicing out of China has weakened the currency, the yuan, against the dollar and other currencies. And that weakness of the yuan has helped sustain China’s exports, which support tens of millions of Chinese jobs.
The movement of money out of China has roughly matched the money brought in by the country’s large trade surpluses. To the dismay of many countries elsewhere, particularly in Europe, China is exporting rising numbers of solar panels, electric cars and other advanced products even as it has replaced more imports with domestic production.
The yuan fell in value earlier this year to its lowest level in 16 years. It hovered around 7.3 to the dollar for much of the past two months, before climbing somewhat in the last week.