Chinese capital

Question 1

How much £ is leaving China?

Answer 1

In 2016, £600 billion left China in capital flight, at a rate of £40 to £80 billion per month

Question 2

Why is £ leaving China?

Answer 2

1. Fears about a weakening currency (to some extent)
2. Fears about the Gov’s AC crackdown:

Corrupt individuals are moving their wealth out to avoid being caught and those with legitimate wealth are doing the same for fear of having their assets confiscated as part of the often indiscriminate anti-corruption campaign.

A survey into Chinese investor attitudes showed political risk and corruption to be a major factor in transferring funds abroad, with over 60 per cent of respondents saying their primary motive in investing overseas was to escape the risks they saw in China.

Question 3

Is corruption a big concern in China?

Answer 3

4/5 Chinese citizens considered official corruption a big problem and of even greater concern than pollution and food safety

Question 4

Tell me about Chinese President Xi Jinping’s anti-corruption campaign…

Answer 4

• Launched in 2012 has caused a degree of instability. - In 2015, 282,000 officials were punished for ‘discipline violations’, with an estimated 99 per cent conviction rate once an official has been charged with corruption.
  This has been a key factor behind high levels of illicit outflows and capital flight

Question 5

Why does Chinese investment not always feature prominently in the official buying figures?

Answer 5

This can be explained by how Chinese investors have turned to Hong Kong through which to funnel their wealth. This practice is used in order for Chinese citizens to avoid controls over transferring their wealth overseas, which have been introduced in response to high capital flight levels. Therefore, when investment from Hong Kong is highlighted this may actually be mainland Chinese investment.

Question 6

Why are you connecting China to this issue? What evidence do you have?

Answer 6

1. Over 70 per cent of respondents to an investors survey saying they had already invested in residential property overseas.
2. According to Juwai – a Chinese property site – the UK received the 4th highest number of property enquiries in 2016 from Chinese investors.
3. In 2013 a Savills report indicated that investors from China and Hong Kong were the biggest buyers of prime new build property