I live in China and plan to stay here for awhile. In the future I plan to invest in property in Canada ("I'm a Canadian citizen). Though my girlfriend's parents would love it if I bought a 75 year lease apartment in China...But I really don't see the logic in buying Chinese property (please feel free to critique or correct my arrogance, as I'd be interested to hear all your insights).
Here's the meat: my school's contract is written in USD, so my salary is in USD, but i have the option of taking a portion (or all of my it) in the "people's money" (rmb). What should I do?
I do plan on living in China for the next 20 years. Originally my logic was to take my salary in RMB and then exchange it when I go home to Canada. But then that means my salary will go through a total of "two" exchanges. I could always change my plan from investing in property in Canada to investing in "something" in China. The disadvantage of this idea is foreigners have NO RIGHTS in China. So in other words, my Chinese wife would "own" all of my investments. In fact, I would need a Chinese wife to buy anything "large" here (such as a business, property etc). Again, people, please feel free to correct my logic if my ideas are mistaken.
If I invest in Canada, and if I find a Chinese wife, I think half of my assets become hers, and half of her assets become mine. dui ma? So Canada seems to be a safer choice.
I don't know people, please help me! What would you do if you planned to stay in China for 20+ years (if not for your whole career)? I have no idea where I can put my money in China.
Thanks all for your insights.
Compensation in USD or RMB?
Response
Well your not buying your leasing, 75 years isnt ownership. There are really only two ways to "own" (within Chinas definition of ownership) and thats either through a national meaning for you everything is in your wifes name or you create a corporation and the corporation is owner (same problem though as a director of your Chinese branch office, or company has to be a national) but you can protect yourself by naming a Chinese legal entity such as a law firm as the Chinese director (which is far safer as it wont be worth it to the legal firms business and reputation to betray one of its small clients). Otherwise your right in general expats/foreigners have no rights. You will find lots of smooth talking high heeled flosst property agents in China that will always try to tell you different and that its an issue of perception and interpretation but then you read the contract and there is no ambiguity you basically have no rights, and more importantly no recourse.
Property rights are determined by your place of residence if and when you do divorce. The solution to this is to get a prenuptial agreement, and if your going to invest in Canada get the prenup drafted in Canada. If your going to invest through a corporation or directly in China, get a lawyer, at that point your exceeding the advisory capacity of this forum.
Your money is already being exchanged once. Your IS has to buy USD from their financial institution. They probably have a policy that describes how that exchange is made and what rates are used and when those exchange rates are calculated (either monthly, or a couple of times a year). Your IS is just guaranteeing your exchange rate by writing your contract in USD. The issue becomes how much is that guarantee worth, and it depends on when and how often the exchange rate is set.
You need to talk to your IS and inquire how much they will pay you in RMB and how they calculate that amount. Do they double convert or will they pre-convert? Is it a fixed amount and do you lose the guarantee offset?
In general it is better to take your salary in whatever the local currency is, since thats what you spend. Any investing you do is going to be in local currency (in the case of China) or can be converted at LIBOR or commercial exchange rates (the best rates available) when you do the remittance (wire transfer).
If your going to invest in Asia, whatever the medium of investment is, Id look to HK as the place to do it.
Property rights are determined by your place of residence if and when you do divorce. The solution to this is to get a prenuptial agreement, and if your going to invest in Canada get the prenup drafted in Canada. If your going to invest through a corporation or directly in China, get a lawyer, at that point your exceeding the advisory capacity of this forum.
Your money is already being exchanged once. Your IS has to buy USD from their financial institution. They probably have a policy that describes how that exchange is made and what rates are used and when those exchange rates are calculated (either monthly, or a couple of times a year). Your IS is just guaranteeing your exchange rate by writing your contract in USD. The issue becomes how much is that guarantee worth, and it depends on when and how often the exchange rate is set.
You need to talk to your IS and inquire how much they will pay you in RMB and how they calculate that amount. Do they double convert or will they pre-convert? Is it a fixed amount and do you lose the guarantee offset?
In general it is better to take your salary in whatever the local currency is, since thats what you spend. Any investing you do is going to be in local currency (in the case of China) or can be converted at LIBOR or commercial exchange rates (the best rates available) when you do the remittance (wire transfer).
If your going to invest in Asia, whatever the medium of investment is, Id look to HK as the place to do it.
Re: Compensation in USD or RMB?
Actually as a foreigner you can "buy" property in China. Several conditions exist, including having worked in China for one year. This explains the proliferation of small foreign owned restaurants in Shanghai in the past 6 months.
I am also surprised that your school is paying you in USD. From what I understood the government was cracking down and forcing schools to use RMB. Personally I would stick with USD, especially as the Shanghai Stock Exchange is doing a meltdown right now and we don't know where that is headed.
I also think you might need to examine your views on marriage, specifically the "till death do us part" portion of your vows. If you go into a marriage planning on how you are going to split up the proceeds that doesn't set up a very good foundation in mho.
I am also surprised that your school is paying you in USD. From what I understood the government was cracking down and forcing schools to use RMB. Personally I would stick with USD, especially as the Shanghai Stock Exchange is doing a meltdown right now and we don't know where that is headed.
I also think you might need to examine your views on marriage, specifically the "till death do us part" portion of your vows. If you go into a marriage planning on how you are going to split up the proceeds that doesn't set up a very good foundation in mho.
Discussion
mysharona may be right. China has offered various "ownership" schemes before always with provisos, addendums, restrictions, etc. Then you look at the contract and it isnt what they were selling. The other problem is that whatever China is doing now, doesnt mean anything for the future, 20 years, 5 years a year from now they can change anything and everything. Ownership doesnt mean anything when the state can appropriate your property at will.
Re: Compensation in USD or RMB?
One for USD, one for RMB.
Anyone else care to toss in their 2 cents?
Anyone else care to toss in their 2 cents?
Re: Compensation in USD or RMB?
No one can really tell you whether USD or RMB will be better. if we somehow knew we could probably make a lot more money trading FX futures, than teaching.
I would say the RMB is a better option. There is a long trend of the RMB growing stronger against the dollar. As a result when you send money back, the RMB buys more dollars. Secondly, the IMF has been putting some pressure on China to stop artificially undervaluing their currency (this helps exports to be cheaper on foreign markets). My guess is that the trend will continue, and the RMB will continue to grow stronger against the USD.
Finally, you need to be responsible and ensure your long term wellbeing. I strongly caution against putting your investments in another person's name. I personally know someone who lost a house doing this, and I've heard of situations that are much worse. All your partner or someone in her family would have to tell you is, "take your belongings and never come back." If you wanted to push back against this, they could have you arrested. It's very unlikely that a Chinese court will side with you in any situation.
I would say the RMB is a better option. There is a long trend of the RMB growing stronger against the dollar. As a result when you send money back, the RMB buys more dollars. Secondly, the IMF has been putting some pressure on China to stop artificially undervaluing their currency (this helps exports to be cheaper on foreign markets). My guess is that the trend will continue, and the RMB will continue to grow stronger against the USD.
Finally, you need to be responsible and ensure your long term wellbeing. I strongly caution against putting your investments in another person's name. I personally know someone who lost a house doing this, and I've heard of situations that are much worse. All your partner or someone in her family would have to tell you is, "take your belongings and never come back." If you wanted to push back against this, they could have you arrested. It's very unlikely that a Chinese court will side with you in any situation.
Re: Compensation in USD or RMB?
"Finally, you need to be responsible and ensure your long term wellbeing. I strongly caution against putting your investments in another person's name. I personally know someone who lost a house doing this, and I've heard of situations that are much worse. All your partner or someone in her family would have to tell you is, "take your belongings and never come back." If you wanted to push back against this, they could have you arrested. It's very unlikely that a Chinese court will side with you in any situation"
^ This is well put, couldn't have written it better myself!
^ This is well put, couldn't have written it better myself!