China’s rich face million dollar question: stay and risk losing assets, or face the coronavirus abroad?
- The number of rich Chinese moving abroad to safeguard their financial assets has grown in recent years
- Concern about asset seizures has stoked enquiries about obtaining foreign citizenship, immigration consultants say
While some affluent Chinese would like to emigrate to escape a perceived harsher environment for private entrepreneurs at home, they are increasingly reluctant to do so – at least in the next few years – because of concern about the coronavirus pandemic in popular destinations abroad, consultants and businesspeople say.
Many are conflicted and feel under pressure given changing rules in China and around the world: move now and risk infection, or delay and risk assets being seized by the government in what is perceived to be a campaign against private businesspeople.
“All of a sudden, policies could change in any sector – fintech, financing, energy and entrepreneurship – and we private companies that might be forced to make adjustments,” said Ken Liu, a Zhejiang-based senior executive of a foreign trading firm. “It requires us to rethink the risks in the future for what we own and how to protect it.”
For many wealthy Chinese, the aim is to gain residency in a second country to safeguard family and financial assets, while keeping China as their primary place to live and work. But the pandemic has complicated the calculation.
Wendy Zhao and her husband own properties worth more than 20 million yuan (US$3 million) in Shenzhen, China’s hi-tech hub, and currently disagree over whether to move to New Zealand next year to start a new life.
“Our immigration application was successfully approved, but now I’m worried about the overseas pandemic and feel that only China has done a good job of controlling it,” she said.
“China is also one of the only countries whose economy is showing positive growth. I am not willing to move now and will put off moving until a much later date.
“But my husband thinks we should start the transfer of our assets overseas as soon as possible, since he is growing more and more worried about the government’s changing attitude toward private entrepreneurs.”
Many rich Chinese now want citizenship anywhere in the world that could enable them to rapidly move and hold their assets and cash flow
“Many of them used to have a wait-and-see attitude towards emigration, but recently they have been asking about possible options for fast-track schemes to get citizenship through investments” in the host country, Liu said.
“Many rich Chinese now want citizenship anywhere in the world that could enable them to rapidly move and hold their assets and cash flow.”
Passports issued by small countries that most Chinese have never heard of – like Montenegro, the Marshall Islands and Saint Lucia – are becoming popular, because they do not require physical residence while granting access to unrestricted travel, work and banking outside China, consultants said.
For the past several years, China has ranked No 1 for net outflows of assets by high-net-worth individuals, considered to be those with wealth of US$1 million or more (HNWIs), according to the annual Global Wealth Migration Review released by AfrAsia Bank and New World Wealth. In 2018, 15,000 – or 2 per cent of the country’s HNWIs – left China, with another 16,000 following them last year.
The 2018 report noted the outflow of HNWIs from China was not a major concern as China was producing far more rich people than it was losing to migration, but that could change in the future.
“Also, China’s deteriorating relationship with Australia is a major concern. It is possible that China could be in for a rough few years ahead, both in terms of HNWI migration and overall wealth growth.”
04:03
‘Nothing is scarier than staying’: Hong Kong family uproots as fear looms over city’s future
Janet Wang, a Shanghai-based migration agent, agreed the number of Chinese allowed to emigrate to Australia in the next few years would decline, but there would still be other options.
“Canada and the EU will remain popular, and when Joe Biden takes office next year, the willingness and success rate of emigration to the United States will be restored, either via student, job or investment visas.”
China has some 10.7 million migrants living abroad, the third largest number after India’s 17.5 million and Mexico’s 11.8 million, according to the annual Chinese International Migration 2020 report, which was released early last month by the Centre for China and Globalisation and the Institute of Development Studies at Southwestern University of Finance and Economics.
I think it is important to emigrate before it is too late
The report highlighted the growth rate in the number of emigrants to Europe has increased significantly, and future Chinese emigrants will be younger, following a boom in students studying abroad.
Chinese HNWIs will be more cautious in their global allocation of assets and in the selection of destinations, with low-tax countries that are not part of tax reporting treaties getting more attention, the report said.
“I think it is important to emigrate before it is too late, as domestic freedom of speech – whether in the economy, society or politics – is increasingly shrinking,” said Yang Dan, a Shanghai-based writer who’s applying for a visa to Canada.
“Foreign policies on Chinese visas are also changing quickly. Whether it’s the foreign gate or the domestic gate, it’s closing.”
