Where Is the Chinese Yuan Flying To?

As it stands, China’s outward foreign direct investment (OFDI) has significantly expanded during the past decade and with its current credit binge, a lower Manufacturing Purchasing Managers Index (PMI) and plunging housing prices, investment flowing out of China and into developed economies will likely continue to grow in the years ahead.

Some even predict a serious crisis may emerge in China and when the Chinese get nervous, they tend to invest their money abroad.

Global Effects

Currently, China accounts for only a small share of total foreign direct investment in countries like the US and countries members of the EU, but the trend is clearly upward. Chinese cash is flooding the real estate market in several countries.

In London for example, Chinese investors have been snatching up anything from high-end apartments in wealthy neighborhoods to big skyscrapers in the financial district. In Australia, a Chinese sovereign wealth fund bought 9 office buildings in one of the country’s biggest real estate transactions.

In the U.S. Chinese buyers began their buying spree on the coast, buying luxury condos in Manhattan and McMansions in Silicon Valley and are rapidly spreading their buying power towards the middle of the country. These buyers are not only the big investment groups, but less wealthy, younger and well educated individuals who have a broad international point of view and wish to protect their hard-earned yuans.

What It Means for You

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