Isn’t this just entirely remarkable?

And the Chinese seem to want to move money out of China in phenomenal amounts. Global Financial Integrity, an organisation with whom I have worked, estimate that more than $100 billion has left China each year for more than a decade now – making it the biggest source of illicit financial flows in the world. In that same period about $60 billion also returned illicitly annually to China via Hong Kong according to GFI. In other words, this money ’round trips’ out of and back into China where it is then used for speculative purposes – in no small part to fuel the Chinese house price boom. The rest, of course, ends up invested in ‘off plan’ housing investment in London.

My word.

People want to move their money out of a place that does not have the rule of law, a place that is a Curajus State, and into somewhere that does have the rule of law.

Then, once protected by said rule of law they’re quite happy to invest back in the most boomingest economy on the planet.

It’s just such a remarkable finding, isn’t it? You’d almost think that economists have never noted the propensity of human beings to loss aversion.

10 thoughts on “Isn’t this just entirely remarkable?”

  1. No members of the Wen family, nor Zhang, responded to any of multiple approaches for comment, made over a period of several weeks by ICIJ reporters.

    Goodness me, I wonder why that is. Could it be because they thought the ICIJ are a bunch of dangerous 国外 muck-rackers?

    Whose blog, even, is called “The Global Muckraker”?

  2. H/T Raedwald: Simon Jenkins in the, err, Graun:

    “Eight years ago, David Craig’s Plundering the Public Sector calculated that 10 years of New Labour had seen £70bn vanish from taxes into management consultancy, PFI and IT fees, to no noticeable public gain.”

    Which I think shows that at least the Chinese have the right idea as opposed to Ritchie’s Heroes.

  3. The real danger is the inflation of house prices worldwide by funny money; not so much how funny the money was to start with.

  4. I’m sure that Chinese (or any other) plutocrats are massively inflating the market for 2 to 4 bedroom houses in those parts of the world where the normal citizen expects to be able to live.

    The market for mansions, whether on Kensington Palace Gardens, 57th Street or Altamont Road, bears no resemblance and has utterly minimal impact on the housing market for normal people. Ditto the price of Bugatti Veyrons and, say, Skoda Fabias. And those are made by the same company.

  5. S.E.,
    Take the example of Battersea power station – nearly all the flats were pre-sold to foreign buyers. It’s not just Mayfair or Kensington, it’s all the riverside parts of zones 2 and 3 as well.

    The Bugatti comparison is meaningless: the supply of land in central London is limited, whereas the supply of Bugattis is limited only by Volkswagen AG’s commercial decisions.

  6. The Bugatti comparison is meaningless: the supply of land in central London is limited, whereas the supply of Bugattis is limited only by Volkswagen AG’s commercial decisions.

    1. So don’t live in Central London. It’s easy enough.

    2. Go on then. Make a Bugatti Veyron for, not Skoda Favia prices but, say, Porsche Cayman levels. You’ll stay in business as long as somebody selling Thames-side flats for £100k.

  7. 1. I don’t see why the rest of us should endure longer commutes just so that the Chinese can play Monopoly. As I said, it’s not just “central London”, it’s all the non-rough parts of zones 2 & 3 too.

    2. The supply/demand curve looks very different between something whose supply is fixed (land) versus something whose supply is variable (cars).

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