Well, this is interesting. The Chinese government has, apparently, succeeded in reducing its capital outflows. From Better Dwelling:
The world’s greatest overseas real estate binge might finally be over. According to the People’s Bank of China (PBoC), China saw its foreign exchange reserves rise to over US$3 trillion. The unexpected rise is the first in 8 months, and may indicate that the new regulatory crackdown on capital outflows is actually working. This is bad for real estate markets that have seen a sudden surge of buying activity from Mainland Chinese buyers.
China’s capital outflows turned into inflows, meaning more foreign currency went into the country than left. The PBoC found itself with US$6.9 billion more than the month before, a 0.25% increase. This comes after US$220 billion in outflows in 2016, and another $12 billion in January. While it doesn’t seem like a lot in contrast, analysts polled by Reuters expected a drop of more than US$25 billion. Analysts are now adjusting projections since this means China’s foreign reserves are a full US$31.9 billion higher than they anticipated. This could mean that China’s new capital controls are much more effective than analysts had previously anticipated.
Okay, now it’s time to play “Name That Outcome”. Name three likely outcomes and your confidence level in each of them. Some that occurred to me include:
- Nothing. It’s only temporary. (50%)
- British Columbia, California, and Florida real estate price increases will slow. (25%)
- Members of Congress will have conniptions. (100%)
It will certainly piss off the neoliberal jet set who insist capital controls are always bad and can never, ever work and if you try them you’ll blow up the earth.
lets add a 100% probability of increased spam featuring rock bottom prices on distressed water front property.
Based on real estate markets in Toronto and Seattle, the second prediction is not occurring, and makes me skeptical that the capital outflow is really decreasing by as much as claimed.