They saw, they conquered, they came into riches… and now they’re getting the hell out of here. At least, that’s what a new study of China’s rich purports. Released last week by China Merchants Bank and consulting firm Bain & Company, the “2011 China Private Wealth Study” says that 60% of Chinese with more than $15 million to their name have now left or are planning to leave.
According to the Christian Science Monitor:
Bain estimates that the number of “high net worth individuals,” seeking immigrant investor status abroad – essentially buying foreign residence rights with large investments under government programs – has risen by 73 percent over the past five years.
Over a quarter of the very richest, with $15 million or more in investable assets, have already secured US green cards or equivalent in countries such as Australia and Canada, the Bain report says.
And why would they want to leave the land that gloriously begot their wealth?
Part of the reason could be “personal security” and “making their wealth safe”:
Many of the rich Chinese investing abroad to win residence rights do so to ensure their childrens’ education at foreign universities, or their own retirement in comfortable security, the Bain report says. But they are also attaching new importance to making their wealth safe.
“They know that wealth accumulated in a disorderly environment” such as China’s rough-and-tumble economic reform and growth “can easily disappear in the same environment” commented Gu Jun, a Sociology professor at Shanghai University, in an online discussion of the Bain findings hosted by Eastmoney.com. “If order is predictable, wealth is safe.”
That includes, apparently, safe from taxes and future changes in regulation. In an opinion piece on the Global Times:
China has instituted and drafted a series of policies aimed at alleviating the country’s yawning wealth gap. Measures include raising the tax rate for high earners, controlling property purchases and clamping down on overheated markets, including gold and silver investment. This gives rich people incentives to scale back their domestic investments and redirect their capital overseas in a bid to maintain their returns.
What’s more, many of China’s rich people generated their wealth in the early years of the country’s opening-up, when monitoring systems and regulations were almost non-existent. This means many are fearful that they may incur large fines or even confiscation of their assets if the source of their wealth is uncovered, giving them good reason to store their money abroad.
That’s probably a good point, considering how many cases there have been of China’s richest people getting locked up later over “bribery” and “corruption” and all that other stuff.
But most of those theories don’t stem from the report itself, which generally equates the trend with Chinese rich getting the hang of approaching mature markets. It just makes sense if you’re a rich person to diversify into other sound investments – it does that thing, which, in the words of Liz Lemon, helps rich people “turn money into more money.”
Global Voices has a good round up of Sina Weibo comments about the trend, including some from people who believe “the meme is overblown.”
Somewhat related, the Telegraph informs us that while several famous Chinese stars have given up their Chinese citizenship, Jackie Chan has boasted that his son has actually thrown away his U.S. passport to be a part of China.