Analysis: China's property market woes prompt buying spree in Japan

Nikkei Asia ^ | 10/22/2023 | Katsuji Nakazawa

[SeekAndFind]

Older Chinese who have survived the 1966-1976 Cultural Revolution and other tumultuous events are not so naive as to stand idly by as their government fails to effectively cope with the country's property slump.

For these and other Chinese, overseas markets, notably Japan, are presenting an escape route of sorts for their money, partly thanks to smartphone apps.

In fact, a massive capital flight being engineered by rich Chinese has given President Xi Jinping a serious headache, even as his administration celebrated the 10th anniversary of the Belt and Road Initiative by hosting a forum in Beijing this week. That capital flight came into focus earlier this month when two Chinese nationals were arrested in Japan's northernmost main island Hokkaido, shedding light on a tiny avenue crisscrossed by the frequent money transfers that flit between the countries.

"It may be the first time that someone has been arrested in Hokkaido on suspicion of being involved in an illegal electronic money transfer with China," said a source familiar with real estate transactions in Hokkaido.

The source also pointed to the fact that Alipay, a popular Chinese electronic payment app, was used in the alleged improper transfer.

Hokkaido police arrested the two Chinese nationals on Oct. 4, suspecting them of violating Japanese banking law by running an "underground bank." In Japan, it is illegal to transfer money abroad upon the request of a third party; one needs a banking license or has to be registered with the government to do this legally.

The two are alleged to have remitted a total of about 260,000 yuan ($35,000) upon request from third parties, including through Alipay, without a license.

At around the time of the alleged illegal money transfers, it was possible to easily remit relatively large amounts of money in installments by smartphone.

[SeekAndFind]

What is noteworthy is that huge amounts of funds are being transferred between Japan and China, though most of the money is going the other way, from China to Japan.

[Jonty30]

A sign of what is to come.

[Larry Lucido]

You survived the Chinese cultural revolution, there’s a good chance you were a perpetrator.

[jmacusa]

Indeed.

[Jonty30]

At least as part of the Red Guard, yes.

[Zhang Fei]

[You survived the Chinese cultural revolution, there’s a good chance you were a perpetrator.]

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There’s a good chance both victims and perpetrators were two sides of the same coin - power players in the party. There’s a movie called The Purge, where random individuals get the chance to go after anyone they want. The Cultural Revolution was The Purge, dressed up in ideological jargon. The reason it’s wrapped up in ideological motifs has to do with why when rulers kill potential threats to their rule even without any good reason, they make up a plausible-sounding one. To do otherwise would be tyranny, and invite the hatred of the public, which might be consequential enough to help feed both revolt and equally brutal retaliation against them.

[chajin]

A large percentage of rural Japan, and a smaller amount of urban Japan, is for sale to anyone willing to buy it, including gaijin (non-Japanese), as a result of the population shift in Japan. Westerners have tended to purchase individual properties for individual use, but it wouldn’t be surprising if the Chinese are going for larger scale purchases, as they have in the US.

[NetAddicted]

Read later.

[VanShuyten]

When I lived in Japan decades ago, one of my friends was an illegal from Pakistan. That was when Japan turned a blind eye to illegals because there was a large labor shortage. Anyway, this guy made a living by exporting used cars and construction equipment. At that time, there was a huge underground banking system to service all the illegals, based on import/export businesses, usually with a Tony Soprano-type as a frontman.

[Larry Lucido]

Indeed.

[roadcat]

A large percentage of rural Japan, and a smaller amount of urban Japan, is for sale to anyone willing to buy it, including gaijin (non-Japanese), as a result of the population shift in Japan.

I've seen video accounts of lots of vacant homes in rural Japan, that are selling for dirt cheap. But having been abandoned, are in very rough shape. If you buy, you pretty much have to rebuild everything. Not a problem if you are retiring there, but doubtful if you could make any money flipping them. As you say, I can't imagine Chinese buying individual residential properties.