Economic woes and depreciation of the yuan in China are affecting the lives of some Chinese immigrants thousands of miles away.
Zhai Li of Pasadena, California, has a consumer goods factory in China’s Xi’an, Shaanxi province, with her husband. Zhai and her son moved to Beijing so her son could attend elementary school there. She brought him back to the U.S. for middle school while her husband stayed in Xi’an to take care of the business.
“Usually, my husband sends us money for living expenses from China. We earn money in China and spend it here. I definitely don’t want the yuan to sag because my son’s tutoring fees and living expenses cost a lot every month,” Zhai said.
The Chinese yuan has slid to 7.3 to the U.S. dollar, a 10-month low and almost at the level of the 2008 global financial crisis, causing worry and uncertainty among some new Chinese immigrants living in the U.S.
“The factory at home can barely operate since the pandemic, which has greatly affected our income. I am really worried,” Zhai said.
She said that in the past, if people had a little extra money, they would want to spend it on more expensive things. Since the pandemic, people have run out of money. Many of them buy only what’s needed and not necessarily brand-name items, Zhai said.
“As the Chinese economy continues to deteriorate, the rate will likely exceed eight. Then, the yuan will become worthless like a piece of paper,” said Chinese immigrant Liu Pingfei, owner of a used-car dealership in Monterey Park, a Chinese enclave in the Los Angeles area.
Vicky Li, a businesswoman in Los Angeles, is more fortunate. She has stores in Los Angeles and Guangzhou specializing in dry goods.
“Usually, if business in China is good, I will exchange the yuan for U.S. dollars. If the business in the U.S. is better, I will exchange U.S. dollars for the yuan and then use it to purchase goods,” she said.
The weakness of the yuan “has little impact on me because my transactions are not very large, so it is still OK,” Li added.
Derek C. Tung has worked as a tax lawyer, accountant and financial planner in Los Angeles for 34 years. He works with many Chinese immigrant clients. He said the weak yuan would affect the middle class the most, and he expected the Chinese currency to continue to depreciate, chipping away at the purchasing power of people who depend on the yuan, such as Chinese students studying in the U.S.
“If you are not in the U.S. to invest but to study, and your parents are only working class, civil servants or ordinary workers in the private sector, with an annual income between 100,000 and 200,000 yuan ($13,666-$27,333), the weakness of the yuan will have a great impact on them,” Tung said.
Tung said he expected fewer Chinese to be traveling to the U.S. and buying real estate for investment in the future. However, people will still invest on a smaller scale and purchase primary residences, he said.
Adrianna Zhang contributed to this report.