By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own

As crunchy vignettes in U.S.-China relations go, it’s hard to beat the moment in 1979 when President Jimmy Carter pressed Deng Xiaoping to let Chinese people emigrate more freely. “If you want me to release 10 million Chinese to come to the United States,” the paramount leader offered, “I’d be glad to do that.”

Deng was being hyperbolic, but he had a point about what could happen when China shakes loose. Last year over 100 million tourists sallied out of the People’s Republic. But the real story is investment. Rhodium Group, which tracks outbound investment from China, sees $2 trillion of capital flows over the decade ending in 2020. The total stock of Chinese investment in the United States in 2013, for comparison, was $8 billion.

Real estate is at the heart of it. In the two years to March 10, $10.4 billion was invested by Chinese buyers into U.S. commercial property, according to Real Capital Analytics. For the two years before, it was just $1.5 billion. Since 2013 some $6 billion has gone into Manhattan alone, including the Zeitgeist-capturing $2 billion purchase of the Waldorf Astoria hotel by little-known insurer Anbang in February.

These numbers don’t capture the full picture. Chinese investors buying property in the United States commonly route their deals through tax havens like the British Virgin Islands and the Cayman Islands, for anonymity as well as convenience, creating a statistician’s nightmare. While it’s often possible to work out what’s Chinese – crudely, a company with “Dragon,” “Golden” or “Lucky” in the name is often a giveaway – some will slip through the cracks.

A larger gap in the data is residential purchases, which are hard to track, and the numbers aren’t small. Unlike Anbang, most buyers of homes want to stay below the radar. One way to quantify this investment channel is to look at the number of investment visas that have been issued to Chinese citizens under the U.S. EB-5 programme, which gives visas and eventually green cards to applicants prepared to put up at least $500,000 and create 10 jobs.

Some 37,000 Chinese nationals were waiting for EB-5 approval at the end of 2014, according to estimates from Savills Studley. Assume that’s around 15,000 families needing somewhere to live. At the national average price of a new one-family home of $348,300, that’s at least $5.2 billion of investment. A large chunk of that will land on New Yorkers’ doorsteps.

One beneficiary of those flows is Victoria Rong Kennedy, a broker who works with rich Chinese buyers and has sold properties in buildings including 15 Central Park West, home to Goldman Sachs chief Lloyd Blankfein. “This is our golden triangle,” she says, waving through a third-storey window towards the south end of Central Park. Her typical Chinese client is low-key, pays cash and is happy to foot the 6 percent broker fee needed to secure a Manhattan zipcode.

The biggest surprise for some buyers is that nabbing a slice of the Big Apple requires more than money. Getting into a building is one challenge. Fifth Avenue, while highly in demand, remains a bastion of old money where residents’ committees can be reluctant to admit Asian plutocrats. New buildings, where developers sell direct to buyers, are easier. In either case, for anyone used to China’s market the process is a challenge right up until the sometimes hours-long closing meetings where paperwork is signed with all parties present around a table. “It’s like a wedding,” Rong Kennedy says, “Or a divorce.”

Immigration is a political hot potato in the United States, with some Americans unsure whether the hordes Deng hinted at are what they want. But worries about the impact on the property market, in New York at least, are overstated. Around 80 percent of homes are cooperatives, estimate brokers including Rong Kennedy, putting them largely off limits for Chinese newcomers. Buyers must win over resident boards, including providing evidence of long-term employment that few Chinese buyers have.

Tax authorities might have a greater interest in managing the inflows, since many investments are structured using preferred shares or equity-like debt that disguises the foreign ownership of real estate, exempting it from the 10 percent withholding tax due from non-resident owners when a property is sold. But that is hardly a China-specific problem. Nor is the difficulty of identifying sanctions-busting and money-laundering when such structures are used.

The people who should worry the most, perhaps, are China’s leaders. The surge of capital across the country’s borders – despite controls – shows that where there is a will to take money out, there is also a way. Technically, Chinese citizens can only take $50,000 across the border per year. In practice, clubbing together with friends and family to pool quotas is common, and banks and other conduits are happy to help. And China’s capital controls are no concern of sellers, brokers and lawyers in the United States.

Those in Beijing turning a blind eye might consider the relationship between capital and confidence. Brokers and property consultants say Chinese buyers, once on the lookout for lucrative investments, have in the past year shifted towards seeing property overseas as a way to preserve their capital. Some are now prepared to pay non-resident taxes if it means they can sink their money into a foreign home faster.The trend is partly sensible diversification. But the logic includes uncertainty about China’s future economic growth, its reform program and even the political stability of the ruling Communist Party. There’s a fine line between capital preservation and capital flight. To turn Deng’s idea on its head, the real question may be how many tens of millions of its elite China can stand to lose.