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China’s economic Great Leap Forward stands as one of the defining moments of the closing of the 20th century. Now an economic powerhouse, China and its $3.7 trillion in foreign exchange reserves are viewed by some with fear and trepidation. Others see it as an immense opportunity to create more widely shared prosperity, bring people closer together and remove barriers in the way of understanding and peace.
I am one of the latter.
The exponential growth of the Chinese economy and the remarkable rise—creation, really—of the middle class in China is an entirely new factor. Dominic Barton, global managing director of McKinsey & Company, estimates that by 2022 China’s middle class should number over 630 million; although astounding, this figure would still represent only 45 percent of China’s population.
Armed with savings and disposable income, an increasing number of Chinese have entered the North American real estate market. Some families are looking for a safe haven for their life savings; others seek a place to retire. As prosperity spreads and its economy grows, there are another 600 million people in China striving to reach middle class status.
While this undoubtedly creates challenges for Chinese policy makers, it represents a tremendous economic opportunity for North America, which has become a highly favored destination for Chinese investors. The stability of the political and investment climate, relatively low prices, and attractive location compared to other key markets, make North America a powerful magnet. Mainland Chinese, now cash rich, are actively searching for new places to deploy their capital.
Since the collapse of the Soviet Union, previously closed economies have joined the community of trading nations. This has created a new-shared prosperity and burgeoning middle class in developing countries. Nowhere has the positive and extensive consequences of this new reality been more apparent than in China.
China will continue to grow for the foreseeable future, fueled by a new and increasingly sophisticated middle class. This newly prosperous sector will aggressively seek out investments in North American real estate, in part as a safeguard against political uncertainty at home.
Trade and investment is a sign of strength and vitality. There’s no better leading indicator of a healthy and robust economy than people putting their money in hard assets like real estate. And there’s no better testament to us, or a more tangible expression of confidence in our future economic prospects, than investment in our real estate market.