Frank Ching is a Hong Kong-based journalist.
China’s per-capita income may still be low, but the country has more than its fair share of billionaires.
China today is home to 658 billionaires, more than the 584 in the United States, according to the Global Rich List published by Shanghai-based Hurun Research Institute, which tracks rich people worldwide. And there are far more who are merely millionaires: In early 2017, there were an estimated 1.47 million families worth $1.5-million or more in China. Among them, 99,000 were worth $15.3-million, with 65,000 worth $30-million. Together, these families controlled trillions of dollars.
But five years ago, a note of urgency entered such reports. In 2014, Barclays Wealth found that almost half of China’s high net-worth individuals (HNWIs) were thinking of pulling up stakes within five years – that is to say, by this current year. The study, done jointly with Ledbury Research, said that 47 per cent of Chinese millionaires planned to emigrate, while another 20 per cent had not made up their minds.
It was unclear how candid these HNWIs were being in these interviews, but the report represents alarming data for the leadership in Beijing all the same. China had the highest rate of planned millionaire flight in the world, exceeding Qatar at 36 per cent and Latin America at 34 per cent. And asked why they wanted to leave, 78 per cent said they were seeking “better educational-employment opportunities” for their children, 73 per cent said they were looking for “economic security,” and 72 per cent said they wanted a “desirable climate.”
In 2016, the Hurun Research Institute and its associate Visas Consulting Group piled on more bad news for Beijing. More than 60 per cent of China’s richest people planned to invest in properties abroad in the next three years as part of their migration plans, according to their report. That survey included conversations with 240 wealthy people with average net assets of $4-million. Some had already emigrated, while others were planning to do so.
Clearly, China has been shedding capital and talent through migration of its wealthy elite. The Communist Party of China’s crackdown on corruption, no doubt, has also had an effect.
However, the government has taken steps to stem the outflow of capital. In 2017, Hurun reported that while a majority of mainland millionaires still said they wanted to leave, 44.5 per cent said they would stay. And in their most recent report last June, Hurun and Visas Consulting found that about 37 per cent of HNWIs were considering migration, a 10-per-cent drop compared with the previous year.
A problem with an immigration program in the United States, the most popular destination for those planning to leave, has only helped Beijing’s efforts. The federal EB-5 investment visa program gives green cards to those who invest US$500,000 and create 10 jobs, and China-born investors have accounted for about 80 per cent of the 10,000 EB-5 visas available each year since 2012. But it has been so successful that there is now a wait period of more than 10 years, making it impractical for parents to plan for the education of their children, since kids can no longer qualify for dependent visas when they turn 21. Similarly, Canada’s federal Immigrant Investor Program attracted so many Chinese applicants that the government shut down the program in 2014 because of the logjam.
Options for would-be immigrants are narrowing, although new ones, primarily in Europe, are opening up. Greece, Spain, Portugal and Malta all offer investment visas. And there are, of course, island countries that offer passports for cash. Vanuatu, a Pacific island country, is probably the most successful in this regard; citizenship is available to those who invest $150,000 or more, and this program is so popular that the money accounts for 24 per cent of Vanuatu’s total government revenue.
Still, it’s noteworthy that 90 per cent of Chinese HNWIs who were considering leaving also planned to return and retire in China. That is, they were not turning their backs on the land of their ancestors. Instead, it makes clear that what is driving them away are the problems they faced in China, starting with getting their children a good education. At the most fundamental level, they’re concerned with China’s polluted air, its lack of food safety and the inadequate quality of health care and social welfare.
China’s leaders should be pleased that fewer people now want to leave, and that those who leave are planning to return. Making China a country where people want to bring up their children and to live out their retirement years is something well within the control of the Chinese authorities. It can be done – but it will require political will to engineer significant and systemic change.