

The Great Chinese Exodus - prostoalex
http://online.wsj.com/articles/the-great-chinese-exodus-1408120906

======
tathastu
I think these articles are kind of missing the main point. I don't really care
who buys the multi-million dollar houses since I'm never going to be in that
market anyway.

The issue that we are seeing is investors (Chinese and otherwise) who are just
plonking money in the real-estate market for normal homes. The homes we are
seeing right now are pretty basic in the sense that a first-time home buyer
would not be considering them if they had a million dollars cash in the bank.
Yet these homes are going for all cash or 50% down -- I think the main reason
is people with extra money have few options to park their cash; since asset
prices across the board (and across the globe) are at all-time-highs.

[http://www.nytimes.com/2014/07/08/upshot/welcome-to-the-
ever...](http://www.nytimes.com/2014/07/08/upshot/welcome-to-the-everything-
boom-or-maybe-the-everything-bubble.html)

~~~
impendia
I wonder if this is going to increase the political will for additional
housing to be built in San Francisco, as indeed is very badly needed?

~~~
anigbrowl
Unlikely. The less that is built, the more the value of the existing housing
stock goes up.

~~~
Cookingboy
Yep, the SF Bay Area housing policy really is a big example of "I've got mine,
so fuck you".

------
discardorama
It is said that a big factor in the rise of property values in SF is the money
coming in from China.

A realtor friend of mine here in SF was narrating the tale of a house (on
Pacific Heights, one of prime neighborhoods) going for sale for $2.7M, and
ending up being sold for $3.5M after a bidding war... between 2 Chinese men,
both of whom were in China, and were buying the property sight-unseen, all
cash.

[http://blog.sfgate.com/ontheblock/2014/05/02/catering-to-
chi...](http://blog.sfgate.com/ontheblock/2014/05/02/catering-to-chinese-
buyers-in-san-franciscos-real-estate-market/#22929101=0)

~~~
ChuckMcM
I find it a bit smarmy the realtors who imply they can get your property
attention from these out of the country investors. It reminds me of the old
trick of the realtor showing you a picture of the buyers to enable
discrimination without actually bringing it into the conversation.

That said, for a number of foreign nationals buying real estate is a more
durable way of expatriating wealth because it is hard to 'freeze' and it can
be difficult to claw back. During the Iranian crisis there was a student at
USC in my dorm whose parents were sending him money by first buying a number
of houses in west LA and then funneling the rent money to him as his monthly
allowance. It seemed very creative.

~~~
ulfw
Wait - so they could freely send money from Iran to the US to purchase houses
worth millions, but they couldn't send thousands as allowance but instead had
to rely on said houses' rent? That seems weird.

~~~
colechristensen
It was possible to move money but difficult. Doing so once in a lump sum meant
you wouldn't have to worry about the reliability of regular bank transfers
across borders or fear your accounts being frozen once you were successful a
single time. Seizing a house is much more difficult than freezing a bank
account.

------
kelukelugames
My parents moved to the US in the late 80s. A few years ago, they moved back
to China. Most of my Chinese co workers from their generation also plan to
retire back in China.

On paper, there is no comparison between American and China. Cleaner air,
food, and water, better Transportation, more stable government, etc. But
eventually these immigrants hit a ceiling at work or miss some intangible
quality about their homeland.

~~~
seanmcdirmid
Most of my Chinese classmates had plans to move back, but after they had kids
there was just no way. It's not just the pollution, but school system and
education fees. After they had a second and third child, legally they just
couldn't go back.

Some say they will go back on retirement. But at that point it doesn't really
matter.

~~~
justboxing
This is the same dilemma that 1st generation Indian immigrants also struggle
with. Sir V.S. Naipaul compares it to being 'Shipwrecked'. You've arrived at a
new land where you don't know anyone and build your life from scratch. You
spend enough time here, but still don't "fit in" to the culture because you
did not grow up here. Festivals are alien (ex: Halloween), holidays are alien
(ex: Thanksgiving Day). You hit ceilings at work because the promotions in
corporate america are mostly reserved for white men in their 40s. Your kids
grow up here, and experience High School, Prom, College, Internship and such,
and they have no idea what you are talking about when you say you miss the
homeland. You can't leave either, because you've put down roots, probably had
some kids, and back home, things have changed dramatically, and even if you go
back for good, you don't "fit in" there either, because you are always treated
as the "NRI" \- Non Resident Indian.

So after a decade or two,you are neither here nor there, essentially
"shipwrecked" in America.

~~~
seanmcdirmid
I don't know about the glass ceiling. Our CEO is from India (bet you can guess
the company), many of our SVPs are Chinese. As a white male approaching his
40s, I'm not quite sure how promotion will work for me when all of our
managers in my local site are ethnic Chinese (granted, I work in China and
there aren't many foreigner datapoints).

In high school, I had a lot of ABCD classmates, and there parents were
incredibly successful in the Seattle area, especially at Boeing. They had no
problem going into management.

~~~
maaku
> I don't know about the glass ceiling. Our CEO is from India (bet you can
> guess the company).

The fact that I can guess the company implies a glass ceiling.

~~~
Alterlife
What did you guess though... Microsoft? Adobe? Pepsi? Mastercard?

------
walterbell
China has been allowing domestic yuan conversion for western property
purchases, boosting real estate demand in Vancouver, NY, SF & elsewhere,
[http://www.vancouversun.com/business/Secret+path+revealed+Ch...](http://www.vancouversun.com/business/Secret+path+revealed+China+billions+buying+foreign+real/10029551/story.html?__federated=1)

 _"... trial program was introduced in 2011 for overseas property purchases
and emigration ... Once approved, the customer and the bank agree on an
exchange rate before the funds are moved to an overseas account designated by
the customer. Money destined for real estate would go directly to the property
seller’s account to ensure the cash won’t be misused ...

HSBC ... offers its Chinese clients another way to access offshore mortgages
while avoiding the cap on foreign-exchange conversion ... Customers deposit
yuan with HSBC’s mainland unit or purchase its wealth-management products, and
the bank’s overseas branch then issues a foreign-currency denominated mortgage
using the China deposits as collateral."_

------
peter303
Reminds me of the old comment from Deng Xiao Ping to President Jimmy Carter,
whom first exchanged ambassadors between countries. Jimmy complained about
China's restrictive emmigration policy and lack of human rights. Deng retorted
"How many do you want? 10 million, 20 million?" That shut Jimmy up. But it may
be finally coming true.

~~~
lern_too_spel
Did the end of the article remind you of this story?

------
woodpanel
Chinese up and comers lack viable access to financial products. Couldn't it be
said, that american home-ownership-interestees (or people in London) are
paying a premium that is due to the lack of choices to store your earnings if
you were born in the PRC? Due to the lack of good government in China?

I wondered, if the one-sidedness in profiting from globalization would bite us
back in the west. Yes, industries were outsourced, middle classes eroded but
overall most people could afford ever more goods for ever less money, as long
as there are enough third world peasants to put in factories (Which still
seemed like a good deal for both, the 99% percent of the first and the third
world).

I suppose it is getting back at us in the form of absurdly sky-rocketing asset
prices?

------
lnanek2
I had an ex-wife who helped move rich Chinese families to the US. She said
their biggest concern was simply that you only get rich in China if you have a
friend in the government and if you lose that friend or that friend loses
power in the once every four years shake up, then your money gets taken away.
Her clients bought million dollars homes, luxury cars with next years model,
etc. all with cash. Typically they couldn't speak any English and moved to
Chinese neighborhoods in Long Island and other places.

~~~
seanmcdirmid
The cycle is 5 years, but effectively 10 years because re-election (by the
CCP) of the in-government is almost guaranteed.

------
cwal37
"Another aspect of this massive population outflow hasn't yet drawn much
attention. Whatever their motives and wherever they go, those who depart will
be shadowed by the organs of the Leninist state they've left behind. A
sprawling bureaucracy—the Overseas Chinese Affairs Office of the State
Council—exists to ensure that distance from the motherland doesn't dull their
patriotism. Its goal is to safeguard loyalty to the Communist Party."

That quote reminded me of this[1] New Yorker article on the first case of
"economic espionage." It's an interesting read and a look into a different
kind of "spying."

[1] [http://www.newyorker.com/magazine/2014/05/05/a-new-kind-
of-s...](http://www.newyorker.com/magazine/2014/05/05/a-new-kind-of-spy)

------
nabla9
There is already over million Chinese working and living in Africa. Chinese
entrepreneurs, workers etc.

~~~
phoebus
over 400k Africans work and live in china too.

------
chvid
The article mentions that China gets 6,895 investor visas whereas a country
like South Korea gets 364 visas. Given that China is 1,350 mio. people whereas
South Korea is 50 mio., the ratio is really 7.3 visa pr. mio. South Korean
compared to 5.1 visas pr. mio. Chinese.

In the 80es there was a huge buying spree by the Japanese in California and
other places. That stopped when Japan's economy popped in the early 90es.

Today realestate in China is priced extremely high and that creates a lot for
surplus capital for the Chinese to invest. The high realestate price level of
China may persist for a while but not forever and this buying will probably
stop as the Japanese did.

~~~
rtpg
>Last year, the U.S. issued 6,895 visas to Chinese nationals under the EB-5
program, which allows foreigners to live in America if they invest a minimum
of $500,000. South Koreans, the next largest group, got only 364 such visas.
Canada this year closed down a similar program that had been swamped by
Chinese demand.

The fact that Canada closed down an immigration program where each individual
would bring in $500k to the economy is just depressing. So much immigration
law is just pure, unabashed racism.

~~~
megablast
The problem can be, and you see it a bit in Australia, is that they end up
pricing everybody else out of the market.

~~~
rtpg
If this were just about buying houses I understand that reasoning, but if its
an investor visa, I imagine you need to actually put that money into something
"productive".

~~~
nikanj
You only needed to lend it to the government for a few years

~~~
logicchains
If the assumptions behind GDP are valid, government spending may also be
considered "productive".

------
chaostheory
> A sprawling bureaucracy—the Overseas Chinese Affairs Office of the State
> Council—exists to ensure that distance from the motherland doesn't dull
> their patriotism. Its goal is to safeguard loyalty to the Communist Party.

This will only work for one generation. Once their children assimilate in the
West, China will be foreign to them.

~~~
slyall
I know a few 1st generation Chinese kids (age 8-18). It was interesting to see
some of them posting very pro-Chinese stuff to Facebook a few months ago when
the Diaoyu/Senkaku Islands dispute was heating up.

Usually they just post about kids stuff.

~~~
chaostheory
This is will change for the children younger than 10; I've experienced this
first hand.

------
peter303
Upper middle class Chinese have been buying "business visas" to immigrate to
countries like US and Canada. You either transfer a business with certain
threshhold of jobs/revenues or buy into a special bond fund devote to
job./business creation. Typically these visas are around one million dollars.
On the surface this sounds preferable to letting broke immigrant relatives who
could become welfare dependents. Canada recently suspended their program due
to a tenfold increase in applications, nearly all Chinese. The US's problem is
they let private organizations create the investment funds, of which several
have been pure scams.

------
madengr
How is the education system broken in China?

I thought China is supposed to be cranking out millions of STEM graduates each
year, some of which the US will import as H1B. Is it broken in the same way as
the US education system, or is it all just a myth?

~~~
fspeech
A better description may be that the Chinese system has a lot more pressure
from all the competitions, while the instructions are not quite up to the
standards at the college level.

------
tzm
Fwiw, I live in Sunnyvale and have seen this exodus first hand on several
occasions. In fact, just yesterday, a friend from Shanghai moved into a modest
home in Sunnyvale for $1m. Her husband owns a string of dry cleaning centers
in Shanghai and obtained an investor visa ($750k).

Last month I hosted a friend from Shanghai who owns a successful factory. He
is actively scouting for real estate in the $1m - $2m range for his son. He
considered the area "very cheap" compared to Shanghai prices.

I know of several other Chinese professionals that are in the process of
relocating to the Bay area or have already purchased a home.

~~~
akfanta
"very cheap" \- There is no need for the quote. The real estate price in
China, especially in Shanghai has been skyrocketing in the past decade. The
average apartment price in the city is close to 10k USD(per square meter) now.

~~~
rgovind
It is generally assumed that Bay area is more costly than most of China. Hence
the quote. Of course, chinese people may know that it is otherwise....

~~~
seanmcdirmid
I heard the average sale price of an apartment in China was $500K...that is
for the whole country, including 2nd and 3rd tier cities. Now, I don't know
how believable that is, but if true...wow...oh...wow...

------
chiph
The interesting thing (in a bad way) is what will happen when these investors
reverse their cash flow. If interest rates ever rise, they're going to want to
move some of their money out of real estate. And that will depress housing
prices across North America.

------
BorisMelnik
My realization from this is that although China might be owning the USA in
some aspects such as defense, budget/finance and manufacturing, none of that
matters if the people aren't happy, the food isn't good and the air is not
clean.

~~~
cwhy
And you really cannot tell if the people there are less happy than people live
in the US.

People now have much higher living condition the people in the past (say 18
century), but you really can't tell if you are happier than them.

------
canvia
China only allows ~$50k/yr to be sent out of the country how are these people
able to bypass those currency controls? Or is the story inaccurate?

~~~
kyllo
It is possible to bribe the banks to let you bypass the limits. There is a
huge scandal in China right now over this.

[http://www.forbes.com/sites/gordonchang/2014/07/13/attack-
on...](http://www.forbes.com/sites/gordonchang/2014/07/13/attack-on-bank-of-
china-for-money-laundering-screams-infighting-in-beijing/)

~~~
contingencies
As well as bitcoin which other people mentioned (and honestly I don't think
this is that large right now), you can also just take bank cards out of the
country attached to multiple local currency accounts in China and max them all
daily. Otherwise, make business invoices from overseas to support the foreign
exchange control bureau's approval of your transfer. Or just drive through
Laos to Thailand with a car full of cash and enjoy your 90 day visa on arrival
as a Chinese citizen. There's a lot of options.

------
rahimnathwani
The picture captioned 'Visitors to Tiananmen Square struggle with Beijing's
polluted air' shows someone wearing a _surgical_ mask rather than a
_pollution_ mask. Surgical masks offer no protection against small particulate
matter in the air.

------
wilbeibi
Why there are so much news about Chinese, can we talked about other countries?

------
bayesianhorse
It's almost strange and unexpected that the economic rise of China actually
benefits the poorest most. The "rising tide" of wealth has lots of problems,
and it is hard to compare agricultural China with the industrial, much more
populous one, but in General, most Chinese are better off.

And despite that, the richest want to emigrate, because they can't get any
"richer" in China. They need western infrastructure to grow their own utility
and/or wealth.

~~~
peferron
Why can't the richest become even richer in China? Which parts of the western
infrastructure do they need to grow their own utility and/or wealth?

~~~
kyllo
They want their kids to be educated in English and attend universities in
English speaking countries, which increases their career prospects not only in
those countries, but also within China.

Also, a number of these wealthy Chinese seeking to emigrate are highly
corrupt. Some of them have committed all kinds of bribery, fraud, and
extortion to enrich themselves. Although corruption is rampant in China, it is
also punishable by death, so these people are looking for a quick getaway
route should they get caught.

~~~
enraged_camel
>>They want their kids to be educated in English and attend universities in
English speaking countries

Yeah, but why the West specifically? There are places like Hong Kong,
Singapore, Australia, etc. with very good universities. While they can't
compare with certain brand-name schools like Harvard and Yale, the quality of
education they offer is near the top.

~~~
AlexDanger
International students coming to Australia for their education is a very big
business. In total its about 22% of the student population, up to 40% at some
institutions.

[https://aei.gov.au/research/International-Student-
Data/Docum...](https://aei.gov.au/research/International-Student-
Data/Documents/INTERNATIONAL%20STUDENT%20DATA/2013/2013%20Time%20Series%20Graph.pdf)

[http://www.australianuniversities.com.au/directory/student-n...](http://www.australianuniversities.com.au/directory/student-
numbers/)

Domestic university students in Australia have no upfront tuition fees. We
have a student loan type system called HECS (Higher Education Contribution
Scheme) which is sort of like a student loan but effectively interest free (it
rises with inflation via the CPI). Payments are made automatically from your
salary but only when you reach a thresholded salary (~$50k). Its been a very
good system in that it achieves a specific objective - accessibility of higher
education to most Australians.* If your parents arent rich you can still go to
a good university.

[https://www.ato.gov.au/rates/help-repayment-thresholds-
and-r...](https://www.ato.gov.au/rates/help-repayment-thresholds-and-rates/)

International students are not eligible for this system and pay full tuition
fees. Fees vary considerably but you are looking at $50k-$250k depending on
whether you are going for an arts degree or full medical school. It is a
massive source of funding for universities in Australia.

There are occassionally some minor scandals, for instance every now and then
an academic passes an overseas student that should have failed because of
administrative pressure. There is also a real concern that research is second
place and the institutions are becoming undergrad sausage factories churning
out graduates. Universities here are certainly more like businesses than they
were 20 years ago (see comment below about our current government). But
overall I think its been very positive for Australia. It aids multicultural
thinking and integration with Asia. It also subsidises the cost of education
for domestic students.

* the current government are trying to change this so we have a system more like the USA. They have a fight on their hands.

------
niklasber
Stopped reading after this: "Today, China's borders are wide open. Almost
anybody who wants a passport can get one."

Obviously poorly written article.

~~~
akfanta
"Today, China's borders are wide open. Almost anybody who wants a passport can
get one." What's wrong with this?

~~~
madengr
They probably mean anyone who wants to leave, can, versus strict emigration
control that communist countries had in place to stop brain drain.

~~~
phoebus
haha, anyone else here still believe china is a communist country?

