China’s push back on dual passports may derail investment immigration schemes
- Mainland authorities may tighten up on the practice of holding citizenship rights in countries other than China, potentially impacting high-net-worth individuals
- Potential crackdown on second passport holders would dampen Chinese enthusiasm for investing in overseas property, experts say
Global real estate investment flows could be disrupted if the authorities in mainland China were to crack down on the country’s booming trade in second passports.
Tens of thousands of high-net-worth individuals in the mainland could be affected if authorities restricted the practice of buying property in a foreign country as a way of acquiring a second citizenship, experts said.
The possibility of such action was highlighted earlier this month when Sun Xiang, a National People’s Congress delegate from Hebei province, was outed on social media as having a passport from the Caribbean island nation of Saint Kitts and Nevis, issued in 2011. He was removed from office two days after the post went up on August 4.
Beijing does not recognise dual nationality, and any individual who obtains a second passport is required to renounce their Chinese citizenship.
“This high-profile second citizenship scandal could lead to a crackdown on wealthy and influential Chinese who have obtained second and even third passports without renouncing their Chinese citizenship,” said David Lesperance, an international citizenship and tax law expert at Lesperance & Associates. “Tens of thousands of individuals in mainland China likely have a second passport.”
Such a crackdown was likely to dampen Chinese enthusiasm for investing in overseas property for the purpose of gaining citizenship, Lesperance said.
“I estimate that up to 95 per cent of Chinese who obtain foreign citizenship by property investment do not intend to renounce their Chinese citizenship,” Lesperance said. “It’s a simple question of economics. If you can afford to buy a foreign passport, you clearly are doing well financially, and China may be the place where you can earn the highest income.”
Other property experts said Chinese investors in overseas real estate have long been aware of the rule, however it has had little impact on purchasing decisions.
“Sun obtained his second passport from Saint Kitts and Nevis. The country obtains 45 per cent of its government revenue from citizenship by investment fees,” said Georg Chmiel, executive chairman at property portal Juwai.
Mainlanders represent more than 40 per cent of second-passport holders in Antigua and Barbuda, 80 per cent in Grenada, a third in Saint Kitts, and about 20 per cent in Saint Lucia, according to Investment Migration Insider.
“They use their new visas and citizenships to make international travel and investment easier, obtain benefits at home – such as simplifying their children's admission to international schools in China,” said Chmiel. “They use it to prepare for the future, when they may wish to move overseas to retire, for commercial reasons, or to be near their grandchildren.”
Costs for obtaining citizenship in Saint Lucia, Antigua, and Dominica start at US$100,000, said Chmiel.
Lesperance said choosing the right second citizenship is important.
“For example, Malta has been very popular with Chinese. However, Malta publishes the names of individuals to whom it awards citizenship,” he said. “That makes it easy for the Chinese government to identify those who might have dual passports illegally.”
Chmiel said the second passport industry was “growing at a rate of 23 per cent per year”.
