Why China Has Recently Become A Bad Direction For Profitable Investments From Abroad

China has been widely considered as an Asian economic miracle by many – before 2020. In 2021, its political and financial problems aggravated, which has put many foreign investments in jeopardy. Below, we’re considering foreign investment enterprise crisis reasons in China in more detail.

How foreign investments in China is regulated?

China has a particular legislation piece called the Negative List, which is officially China’s foreign investment law. It prescribes, in what industries foreign investors, private and corporate, can and cannot invest and how should they do it. It is a sort of governmental incentive, which, despite its name, is aimed at bringing more foreign investments to the country. So they were growing almost every year since 1991. And they accelerated in 2018 and later after the Negative List was made milder and more attractive.

China economics crisis

And the Negative List was working well – until recent years, when Xi Jinping, using his highly autocratic regimen, turned the policy of his country to the side of becoming more Marxist. If you, as a good investor, follow the news from China, you should have noticed several very alarming signals from there:

• Jack Ma’s persecution, his replacement from his position of Alibaba’s CEO, and factual taking control of his company – that is just one loud example of many similar cases in the latest two years
• Xiaomi, Pinduoduo, ByteDance, Alibaba, Tencent, and other giant private companies in China – have forcibly donated already and pledged to donate in several upcoming years billions of US dollars to support the communist party’s regimen
• Lowering the main indexes of tech companies in China (Invesco Golden Dragon China EFT and Hang Seng Tech Index) in 2021 to 6,000 points from their peak of 11,500 points in 2020
• Chinese shares index fall from 5,100 in 2015 to 3,700 in 2021
• Chinese house prices inflation peaked 140% in 2020 compared to 100% in 2010 but that was ongoing without any real financial prerequisites for peaking
• Default of Evergrande, which was holding liabilities for $300 billion should do a much bigger boom than it was in 2008-2012, which started with the failure of the Lehman Brothers, which held a significantly lesser amount of overdue liabilities. An additional bad signal is that Evergrande’s business model is broadly copied by other developers in China and Asia, which will also lead to a much massive fall of their ‘houses of cards’ for similar reasons in the upcoming months
• The general household debt in China increased from 55% of GDP in 2019 to nearly 80% in 2021, surpassing a much milder indicator even in the US (74%), the world’s largest economy
• Finally, Mr. Xi Jinping’s focus on the so-called “common prosperity” untwines several connected crises: a possible introduction of a new personal income tax in 2022 (which is, as rumoured, planned at the 20th Congress of the Chinese Communist Party), more state control of private businesses in the biggest wings of the Chinese economy, including data, e-commerce, fintech, gaming, private tutoring, ride-sharing, social media, and video streaming.

The wide recent and future problems of China are economic, political, and COVID-connected. As for the rest: you should have heard as China closes entire cities with millions of dwellers on quarantine. The latest case in 2021 was on December 23rd with Xi'an city, which has 5.7 million people itself and 12.9 million, considering its urban and metro areas.

How a professional real estate investing company in Ukraine can help

Large volumes of disturbing information, especially the Evergrande’s default, draw millions of large and small real estate investors from this country, forcing them to seek other directions for their money (if they’re successful enough to withdraw their money from China now). If you have not yet completed investments in China, don’t! Rather, pay attention to Ukraine – this is a much safer harbour for your money.

Ukrainian capital makes the most interest in terms of ROI. The country is politically and economically stable. Speaking on average, the ROI for real estate objects that are let for rent (short-term and long-term) varies in Kyiv from 7% to 15% annually. The most appealing options today are:

• Apartments in many-story houses in the capital
• Detached homes in suburbs
• Hotel-kind income houses, with seasonal and off-seasonal rent (this type of object is only rising in Ukraine and it is decades away from being the same large as in the US or Europe, so there is much space for growth).

Our professional investment company can guide you through the entire process of investment, starting with money transfer to Ukraine, proceeding with the selection of a good object or several, and managing them on a daily basis. With our practical assistance, the investment process in Ukraine becomes easy and transparent for you.

Conclusion

Considering China as a profitable and risk-free destination of international investments is no longer the case. A large economic turmoil is waiting there for all investors in 2022 and at least in 2023. So pay attention to a safe harbor, which is Ukraine.