chi-uk

Western economies are recovering out of the land-price-led lows of 2010 in text-book fashion; the 200 years of history of which I describe in my book Secret Life of Real Estate and Banking.

Further buying by the Chinese in the UK and Europe:
http://www.telegraph.co.uk/technology/news/10380821/George-Osborne-trumpets-Chinese-investment-in-London.html

Chinese internet company Rekoo, also a social gaming company, is to set up in London.

Even more into real estate
http://www.standard.co.uk/business/business-news/telford-homes-buoyant-as-chinese-pile-into-canary-wharf-8881304.html

Telford Homes bouyant as Chinese pile into wharf” 
Instructive reading there.  “The influx of overseas cash has fattened margins…“.  Imagine what could happen if the Rmb (Yuan) ever becomes fully convertible, tradable in futures, and all those Chinese buyers actually come and visit their recent purchase… 

Which may not be so far off.  The UK government has just this week opened its doors to Chinese banks (I told you they would):
http://www.theguardian.com/politics/2013/oct/16/osborne-chinese-banks-mps-check-city

UK opens doors to Chinese banks”   The chancellor relaxing the rules, special terms for lenders, to operate as branches to avoid regulation… and boost the UK’s status as an offshore Chinese financial centre. 

Can you see the set up here?  The Directors of Chinese banks have never really seen a real estate cycle.  What they did see of the GFC, the Communist (is it really?) government stemmed in China through a vast expenditure program on infrastructure and other social spending – entrenching the moral hazard argument and the general Chinese belief, for next time, that the government can control / alleviate the cycle.  In future years, UK citizens will clamour even more for loans – perhaps the China banks may get a bit more liberal in their lending, perhaps also they may have access to more funding from back home which they may bring to the UK.  Behind the scenes, there will be corruption in lending and where the funds come from, as per the above.  If land price falls sharply sometime in the years ahead, perhaps these Chinese banks may decide simply to run back home and leave the mess to the UK to clean up…   (It’s been done before.) 

By then the British will have forgotten the special terms the Chinese banks were given to set up in the first place… and there we have another cycle unfolding.  Do you see how real estate cycles develop now?  The set up for later is happening right before our eyes.  Government action absolutely ensures it.