China has sought stricter control on currency leaving its borders in an attempt to prevent devaluation of the Yuan. China’s SAFE (State Administration of Foreign Exchange) Program has implemented blockades on currency exiting China for the purpose of new Real Estate or Insurance transactions. There has been a surge in the smuggling of currency out of China, and SAFE is taking measures to mitigate any efforts. SAFE has found that Chinese entities are using a multitude of underground methods to try and get funds into international investments. Some of these methods include using underground banks, funneling money through employees under the wire limit, and manipulating customs manifestos.
The Chinese Yuan has already decreased its competitive edge with the US Dollar, and China is worried that currency leaving the country could cause devastating financial catastrophe. However, this is a double edged-sword. Foreign Chinese real estate investors are overburdened in foreign currency debt. The new regulations are going to place financial burden over these projects, as developers can only bring on new debt or refinance debt with a maturity rate of 1 year or less. (Wolf Street)
This is just one of many affects brought on by the trade war between the US & China. Unfortunately, things will be getting worse for investors and home buyers before they get any better.
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