Crackdown On Chinese Funds?
Everything that happens can be experienced as alarming. In Canada, for example, the pouring of money across the Pacific from China may (or may not) be a takeover of great swaths of real estate in Vancouver and Toronto, leaving young people unable to find a reasonably affordable place to buy and live in.
The federal government, the B.C. government and the City of Vancouver have been so alarmed by this possibility that they put in place various measures to cool the ardour of overseas home-buyers. And they have worked. Sales dropped dramatically in Vancouver last year, compared with the year before.
It was odd, then, that the news that China is cracking down on the amount of money its citizens can convert into foreign currencies was also met with alarm. Analysts predict that the number of Chinese people buying Canadian real estate will drop as a consequence. Wouldn’t that be a good thing, since it will take the pressure off the overheated Vancouver and Toronto markets?
Yes and no. The new Chinese policy may well help fix a problem that Canadian legislators have been anxious about. But it is also part of a broader attempt by Beijing to control its citizens.
The surge of money out of China has not been just about residential real estate in the Lower Mainland. Last year, Chinese business corporations invested US$45.6-billion in the United States alone.
The government of China needs to keep a lot more money at home. Its reserves are diminishing, and it wants more of the country’s wealth spent on its own soil.
But the sinister phenomenon of pressuring Chinese citizens to return to China appears to be part of the same trend. Around the time of Premier Li Keqiang’s visit to Canada in September, there was talk of a China-Canada extradition treaty – not a good idea. What’s more, Chinese expatriates are being encouraged, not so subtly, to return to China, so that their relatives who may be in trouble with the authorities might be treated better.
With all these signs of a re-emphasis on mainland China, and pressures on Hong Kong, too, it is clear that Beijing intends to reassert its control over its people and the region, and turn inward. And that is indeed alarming.
Source: The Globe & Mail