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China has the world’s second-largest number of ultra rich, after the U.S., with more than 32,000 peoples holding wealth exceeding $50 million, according to September report from Credit Suisse Group.
The departures among the wealthy already began last year. About 10,800 rich Chinese migrated in 2022, the most since 2019, and the second most after Russia, according to New World Wealth, a global data intelligence partner of investment migration consultant Henley & Partners.
https://www.japantimes.co.jp/news/2023/01/26/asia-pacific/wealthy-chinese-exodus/
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Chinese leader Xi Jinping’s decision to dismantle COVID-19 travel restrictions is accelerating an exodus by wealthy residents, who could fuel billions in capital outflows as they plow cash into property and assets abroad.
Since the end of “zero-COVID” in December, many rich Chinese have begun traveling overseas to check out real estate or firm up plans to emigrate, immigration consultants said in interviews. That’s threatening a brain drain in the world’s second-largest economy as well as outflows that could pressure its financial markets.
Over the past two years, Xi’s crackdown on industries like technology, real estate and education, and his push for “common prosperity,” have spooked the rich, long accustomed to growing wealthier as long as they didn’t question the supremacy of the Communist Party. Advisers to the wealthy say those concerns have worsened since October when Xi cemented his political control at a twice-a-decade party congress.
Canadian immigration law firm Sobirovs is seeing a growing urgency from Chinese clients seeking to migrate to the North American country. “I would say the past six months people really got fed up. And so we see a spike on consultation bookings,” said Feruza Djamalova, a senior lawyer at Sobirovs. “Now our clients from China, they’re willing to do relocation and they want to as soon as possible.”
Before the pandemic, China faced capital flight of about $150 billion annually from people going overseas, but the amount is likely to be higher in 2023 since they haven’t be able to travel for the last three years, according to Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis. Her calculation — worked out by looking at unexplained differentials in global tourism data — is an estimate of funds left abroad permanently by Chinese nationals who travel.
“China will confront big outflows this year and this will likely pressure the renminbi and the current account,” Garcia Herrero said. The capital flight might not be bigger than previous years if many can’t get their money out, but it could still impact the labor force, productivity and growth, she said.
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China has strict capital controls. Citizens can convert only $50,000 worth of yuan into foreign currencies each year. But despite those restrictions, the reopening of travel is enough to fuel outflows with tourism alone — even if people don’t choose to stay away permanently.
“If several million people go out and travel this year, that may still amount to tens of billions of dollars of downward pressure on the foreign exchange reserves that China has,” said Chen Zhiwu, chair professor of finance at Hong Kong University.
Read the article here:
https://www.japantimes.co.jp/news/2023/01/26/asia-pacific/wealthy-chinese-exodus/
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