Corruption Based Consumption or CHINA GDP Decline by 1%-Flight of Capital

Corruption has been a bacteria spread in every economy and in every culture.  Billions of speeches have  been delivered to alleviate corruption but how much have been in the real sense is a question of trillion dollars. China has joined and has blown bugle to fight and reduce corruption within its economy. But this bugle will cost the economic growth for the country. Before I start writing I am confused about how to reflect my emotions on this matter. Should I name the article corruption based consumption or birth of a new economy or decline of GDP. Rival economies of CHINA would be happy since pulling down 2^ndlargest economy to below is a big achievement.

In my research I find that Chinese economy is going to get a healthy slow down in the coming years, ’MAY BE BY DECEMBER 2014 or MARCH 2015’. According to my Estimation around 0.6% to 1% GDP slowdown is being expected from China in the coming year’s time frame. With the recent introduction of GRAFT in china, Chinese investments are flowing out of the country and they are looking aggressively for shifting their asset base from China to other economies. This can have a ripple effect on the economy in the long run. A part of the effect is very much visible now on the real estate sector. Well the rationale behind the slowdown of the Chinese GDP  is that the anti corruption factor has  stalled  the government's economic agenda and administrative reforms, The mounting toll of probes, prosecutions and punishments for offenses ranging from bribery to moral misbehavior has sent officials running for cover, slowing implementation of new economic policies.

Currently in 2014 china has been busy in creating history which will be sung by its grand children to their grand children’s. In 2014 China plunged deep into shopping in the real estate sector where the sector is overshadowed by issues such as tight financing and high inventories which are weighing on prices. London was the most popular destination for Chinese institutional investors, with a total of $2.3 billion (1.35 billion pounds) splitting mostly into residential and commercial spaces. San Francisco and Chicago followed with $548 million and $365 million. China's institutional investment in property overseas rose 17 percent in the first six months of this year, with residential investment surging 84 percent according to real estate services firm Jones Lang LaSalle (JLL). The Central Military Committee, which controls China's armed forces, says it wants military personnel to annually declare the property they own, and has threatened to punish officers who hide or falsify their declarations. China's corruption crackdown has already taken a bite out of the hospitality sector in China with its ban on lavish banquets. Hence bells of slowdown are ringing. Chinese are selling their properties to get out of China and this is well clear from the level of discounts being offered which ranges from 5% to 10% cheaper than the average prices of comparable homes. So flight of capital and consumption has begun. The high level of declarations and negligible conditions of bribery cuts the throat of consumption driven by corruption.

Drilling further in my research I find that Chinese investors are mainly insurance and developers who are building up their investments in those countries where tourist destination is active for the Chinese. Australia and Canada ranked second and third respectively even though it cancelled the Immigrant Investor Program in February. In my research I have found that there is going to be a continuous growth in the coming years in outbound real estate investments by china. The prime trigger for the same is the wild axe which is begin hung over the people due to the fear being caused in China by President Xi Jinping's 18-month-old drive against the pervasive graft that he says threatens the Communist Party's survival. As the corruption crackdown gathers momentum in China, more wealthy Chinese are moving out of the country. The level of fear is even threatening life which propels the growth of the outbound investments. Flight of investments and capital is going to put brakes on the economy. This might be taken as opportunity for the rival economies to push back china and get back the lost economic growth opportunities. Now the biggest question is this that how much corruption would be eliminated or will there be war in china internally.