This is why they are buying US property. The California bubble peaked out about 5X average annual earnings. Housing in Beijing has gone up to about 18X annual Chinese earnings, or worse. Smart Chinese (or just corrupt) who made money during this boom have known prices are rediculus there, and that is why they started buying everywhere else.
After China crashes, they can sell their assets here, and move the money back. They will likely lose money on the American real estate, so I am not worried about them buying up America. In fact, we will be getting a lot of cash back for free.
This is what happened with the Japanese during the 80s. They purchased real estate at the market peak here and then when their liquidity crisis hit they had to do a fire sale of those assets.
The Chinese will probably sell their bond holdings as well at a steep discount.
There will be negative effects here. It will drive down real estate prices and the rising bond yields from discounted bond sales will drive the rates higher on new bond issues.
I can’t wait to hear them start to scream on property taxes that are tied to the ‘perceived value’ of the property they will now own in the U.S.
The Japanese would have done better holding on to their American assets. I expect the Chinese will be buying inflated Chinese assets all the way down. In Japan, "all the way down" meant a 90% drop from top to bottom, with no inflation adjustment. Of course, Japan real estate fell steeply because Japanese output per capita had caught up with the US, so the easy growth (from adopting or reverse-engineering US tech) was behind it. China's is about 1/6 or 1/7.