The Modern Chinese Laundry

According to Global Financial Integrity, about US$1.252 trillion in illicit financial outflows left Mainland China between 2003 and 2012. In 2012, the amount of money leaving China had increased to an astonishing quarter of a trillion US dollars!!

Illicit Outflows 2003-2012

How much of that money is making its way to Vancouver? According to China’s list of the top 100 international fugitives, 26 of them were most likely in Canada. And according to Ian Young’s analysis of immigration data, 80% of Chinese millionaire immigrants to Canada are planning to locate in BC — the vast majority of whom likely settle in the Greater Vancouver area.

Using these figures, we can estimate the amount of hot money flows that could end up here. If we assume 26% of these financial outflows are destined for Canada, and 80% of those individuals locate in the Vancouver area, there was a potential flow of almost US$52 billion into the Vancouver area in 2012 alone!

According to the REBGV, total sales volume for the Greater Vancouver region was $18.6 billion in 2012 — only about 36% of the potential hot money flow from China that year.

Of course, not all laundered money ends up in real estate. But if only a small fraction of it does, that is more than enough to have a dramatic effect on local housing prices.

 

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2 thoughts on “The Modern Chinese Laundry

  1. Pingback: Vancouver Flippers In Trouble | Is Supply The Problem?

  2. Pingback: Investing, Vancouver Style! | Vancouver Housing Blog

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