A lot of it stays in China. Officials may have a large unofficial income source (or two), which they spend on wine, women, and Karaoke (none of which officially existed, just like the money they used to pay for it, so there's no explaining to do); or food (you'll never meet a Chinese who won't think a good $500 meal isn't worth it). Or they channel some to their spouse.
A few big fish will grab a staggeringly huge amount, then run. We are talking huge amounts here, though, not a Chinese millionaire looking for a house for their kids. There's a total of $120 billion missing, taken by an estimated 16,000 officials. Only the poorer ones will be buying what you would describe as a "house".
I'd think most of the Chinese buying houses for their kids are essentially legit businessmen. They probably use cash because Chinese just hate debt. They also see it as an investment, because houses are some of the only things Chinese trust - they see shares as giving a total stranger your money to play with, in the hopes that he gives you more back (I mean, have you seen what US CEOs get paid?).
> I'd think most of the Chinese buying houses for their kids are essentially legit businessmen.
Not the instances that I know of. They are corrupt Chinese gov officials using embezzled money on homes that typically cost 1-4 million USD (mostly in the 2's from what I've seen).
As a Vancouverite, I can confirm this. The only reason our housing bubble didn't pop with everyone else's is the continued influx of large amounts of capital from (principally) China.
It also gets laundered through Hong Kong (mostly Lantau) through gambling (a good reason to be against gambling in general - it's a very well known way to launder money)
Yeah most of that ends up in North America. imo They tend to buy housing in cash for their children mostly in either Vancouver or the Bay Area.