China’s great gambit of dumping the yuan in its trade war with the US is throwing up an interesting question today. Will it trigger a renewed round of capital flight out of China?
Recall that in 2013/14, as the Chinese economy slowed, it suddenly did an about face on what had been a very steady and long term appreciation of the yuan. These two factors unleashed a tsunami of Chinese capital upon the world, especially in real estate markets:
Australia saw more than its fair share of the money given its open borders approach to foreign investment in realty, reputation as a safe haven, large Chinese community and foreign student trade. Indeed, although it was widely deemed as “racist” to contemplate the inflows, they were abundant enough to have a very material impact on property prices for anyone unencumbered by wowserish blinkers.
