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Transferring money into China

vagabond48 (76 posts) • +1

There is a thread on transferring money out of China but wiring money into China is very limiting. We had thought of buying an apartment and the inbound wire limit for an individual is $50K. Even with the 2 of us, we are limited to $100K. I would think the government would encourage a reasonable amount of foreign investment money coming in.

tigertiger (5000 posts) • +3

This is not a direct answer to your question and slightly off topic, sorry.

Here are my observations on buying a property in China, at the moment. I am no property expert, BTW.
With rental mutlipliers now as high as they are in China, property is not something I would invest in anymore.

When I say rental multiplier, I mean the number of months rent it would take to buy an apartment. If you ignore interest payments on a mortgage, and rental inflation, the multipliers are often over 800x. For my daughter in Shanghai it would be over 1000x, and she lives in a fairly modest development.

With a multiplier of 800, it would take 66 years of rent to cover your investment. I am not sure how much of the existing housing stock will still be standing in 60 years time.
Rents are going up gradually, but property values tend not to. Property prices (of new housing stock) may increase marginally, but values of existing property do not behave in the same way. There is a surplus of supply at the moment. However, market forces do not seem to be operating normally in the Chinese property market, there have been reports published about this anomaly.

If you get caught with a property with problems, and many people have been, you cannot easily sell up and move on. Some addresses do suffer from a reputational blight.
Another consideration, if you are considering a mortgage, most new property is undecorated/not ready to move in and is usually a basic shell needing floors, celings, utilities, bathrooms, kitchens, and all plumbing to be installed. You will not get a loan for this, it needs to come out of any remaining cash that you have.

In contrast, if you rent, the property owner has already taken all of the risk and upfront expense. If you move into a place that you grow to hate, it is easy to move and find a new apartment, or even a new city to live in.

You can also leave more of your cash (possibly invested) in your home country, should an emergency repatriation be needed.

Like I said, I am not an expert. These are just my observations based on 15 years in China, as a property owner.

JanJal (902 posts) • +2

I have mentioned this often, but since opportunity arises here goes again.

We have a company doing service export, and in order to receive payments from foreign customers, we were required to have bank deposit or property in China to the value of maximum single transfer that we expect to receive.

For example, if we want to invoice foreign customer for 100 000 RMB, we would need to have equal sum already saved in China in some form.

The authority in question recommended to do like everyone else, and bypass these enterprise transaction requirements by asking the foreign customers to make payments to our personal bank accounts in China.

Asked about it from one of our foreign customers who had previously done business with other Chinese contractors. Was shown an invoice stressing the payer to very clearly mention that this payment is a personal transaction.

Not doing that, but I wonder how much tax evasion that comes down to in national scale.

Geezer (1891 posts) • +2

@tigertiger: Excellent post and a really good way to think about the realities of property ownership in China.

I would also add two more factors which always will remain uncontrollable: 1) the ever changing visa issue and, 2) the relationship between your home country and China.

tigertiger (5000 posts) • 0

Yes indeed, and item 2 was talked about a lot a few short years ago. Discussions floated around the possible need for an exit strategy/plan B if things took a turn for the worse. Things have settled down a lot since then.

cloudtrapezer (696 posts) • -1

Why am I down-voted for suggesting using Swift? As far as I can tell it's the only direct way of moving money from a foreign account to a Chinese account opened by a foreigner. TransferWise and other newfangled services require the receiving account in China to have been opened using a Chinese ID card. Swift's drawback is it's expensive. If people know a cheaper way please let us know.

vagabond48 (76 posts) • 0

tigertiger. When I was last here about 4 years ago, we went to see a new apartment. We just went to the same complex and saw a similar apartment. After 4 years, the building's interior appears to be some what rundown and the apartment needed a lot of work but the guy was asking, I'm guessing approx. 70% more than when the building/apartment were spanking new. Maybe the asking price is high but even paying 40% after 4 years seems excessive so I'm not sure about property values not increasing a lot.

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