Wednesday, December 19, 2012

Many Wealthy Chinese Exit China

More accounts of wealthy Chinese reportedly seeking safehaven by emigration.

A new report in China shows that 150,000 Chinese – most of them wealthy – emigrated to other countries in 2011. While that number may not seem high for a country of more than a billion people, the flight of China's richest – and the offshoring of their fortunes – could cost the country jobs and economic growth, according to the study from the Center for China and Globalization and the Beijing Institute of Technology.

"The private economy contributes more than 60 percent of China's GDP and it absorbs a majority of employees. So if private business owners emigrate with their capital, it would mean less investment in the domestic market, so fewer jobs would be created," Wang Huiyao, director of the Center for China and Globalization, told the state-run China Daily today.

The fleeing millionaires mainly made their money in real estate, foreign currency and deposits and stocks, among other fields, according to the report. They are mainly leaving Beijing, Shanghai and coastal provinces such as Zhejiang, Guangdong and Jiangsu.
I guess there could be various personal reasons for these. Some may even be cronies or relatives of Chinese officials who may be trying to protect their wealth

But many of the exiting wealthy class appear to be jumping from the proverbial frying pan to fire.

More from the same article.
China's wealth flight, however, has been America's gain. The United States was the top destination for wealthy Chinese in 2011, according to the report. Canada and Australia came second and third.

The report said that the United States had granted 87,000 permanent resident permits to Chinese nationals in 2011. Of those, 3,340 were approved through special investment visas, which allows wealthy foreigners to apply for American citizenship if they agree to invest more than $500,000 on job-creation projects. The program has become largely Chinese, with more than more than two thirds of all of the visas granted going wealthy citizens of mainland.
Chinese migrants to the US will likely be faced with higher taxes, and the prospects of instability from America’s degenerating fiscal and political conditions

Yet recent developments suggest that there has been a ballooning tension between China’s centralized ‘communist’ government and the fast expanding decentralized forces from the entrepreneurship class. The new leaders seem to represent the status quo fundamentally employing the same Keynesian policies.

Eventually either the Chinese government will adapt political reforms to conform to the changes of the economy or that Chinese government will have to reverse the recent economic reforms. Such transition increases the risks of political instability where perhaps fleeing wealthy Chinese could be a symptom

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