[tuxpenguine]

My uneducated guess is that Yuan is still over valued. Based on the personal anecdotes around me, I can see that the government is trying everything to tighten the capital outflow. That's not the case for the reverse direction though.

Everyone in Beijing or Shanghai owning a small condo with 70 lease is literally sitting on a property of nominal value of millions of US dollars. How can that value be justified? People are willing to take even 15% discount to get that assets out of the country.

[sremani]

The magic of Chinese two step. There is a glut of Yuan in China while there is a scarcity outside.

All you have to do is take a look at their M3. PBOC is printing like no tomorrow, but cleverly puts a wall with they CNY-CNH shit.

Deep Throat says it should be 20 to 1 not 7 to 1.

[vkou]

The purpose of this isn't to fuck with foreign economies, or to kill jobs in America, or any of that other nonesense.

The purpose of this is to serve as a tax on Chinese exporting companies. They get paid in USD, but they have to pay their suppliers and workers in Yuan. They are being robbed by their own government, because they are exchanging USD for Yuan at a disadvantageous rate.

I don't understand why people who don't live in China give two cares about their currency manipulation.

[sremani]

You are seeing the effects of this "manipulated" exchange rate in American real-estate in every metro-area.

One thing you have to understand is, the exchange controls are for plebs, but the connected including the members of Politburo and State Owned firms (directly or indirectly), can happily get dollar in exchange of the funny money and buy REAL assets across the world. It can viewed benignly or nefariously based on what you think their end game.

But its effecting every one especially if you are in real-estate but also other things.

[vkou]

1. Most people who are buying real estate on the coasts don't care about the exchange rate. They don't even care about the value of the assets they are buying. They are doing it because they are buying security, a backup plan, a diversified investment that can't be clawed back by their government, or exposed to the fortunes and misfortunes of China's economy.

2. Most of these buyers are doing it while illegally avoiding capital controls - not with the blessing of the government. It's why Canada is such a popular destination for this money - it has no reporting requirements. The whole point behind China's exchange rate policy, is that it allows US dollars to enter the economy, but due to capital controls, not leave it (Without being subject to the 'tax' of unfavourable exchange rates.) Chinese nationals buying property in North America are not working with the policy. They were working against it

And yes, there's plenty of folks who do have a direct line to the politburo (Or, more likely, black market channels for exchanging money), and can turn their yuan into USD, without trouble, and then get that USD out of China. I don't think they are responsible for the majority of capital flight out of China.