Are Chinese tourists sneaking billions into offshore real estate?
Are Chinese tourists sneaking billions into offshore real estate?
High-flying travellers may be packing more than sunscreen and selfie sticks in their designer luggage
China’s tourism deficit, the difference between foreign visitor expenditure in China and Chinese visitor expenditure abroad, has reached a not-to-be-scoffed-at USD206 billion in the 12 months through June 30, compared with USD77 billion in 2013, Bloomberg reported.
Crunching those numbers, Brad Setser, a senior fellow at the Council on Foreign Relations in New York and former US Treasury official, suggested that this is the result of disguised capital outflows, much of which could be ending up in the real estate world.
Although outbound Chinese tourism hit 120 million in 2015, the deficit numbers are too massive to chalk up to splurges on luxury handbags in Italy or baubles in Switzerland. In other words, Chinese tourists could be shifting cash to splurge on bigger-ticket items such as luxury homes.
More: This US city is seeing an influx of Chinese investment
Other Chinese tourists are stashing their cash in foreign debit accounts or applying for life insurance products in Hong Kong, reported Setser. The Chinese government has been raring to put a stopper on capital flight since the yuan went on a depreciation streak in 2014. The currency has weakened 10 percent against the US dollar.
“Right now, the world as a whole needs Chinese demand for its goods and services far more than it needs Chinese demand for bank deposits and bonds,” said Setser. “It helps us understand how the slowdown in China over the past few years is impacting world growth.”
Read next: What the US interest rate hike means for Asia’s biggest property markets
Source: Property Report