Chinese millionaires and billionaires are emigrating, voting with their feet on Xi Jinping’s economic management and on the economy’s prospects.
The smart money, as people say, appears to be bailing on China. Millionaires and billionaires are emigrating out of the country in record numbers, with 2024 likely to see an out-migration of 15,200 of such people.
The investment migration firm Henley & Partners keeps track of such things and notes that this year’s expected figure is some 10 percent above 2023’s out-migration of 13,800—add to that the 500 high-net-worth individuals who are expected to leave Hong Kong. Most are going to the United States, Canada, and Singapore. There is no way to document how much wealth they will take with them, but from past experience, Henley & Partners estimates that each migrant will take the equivalent of between $30 million and $1 billion in wealth.
The reasons stated for the move vary, as one would expect. Still, most mention the uncertainties implicit in China’s current economic situation and how it raises questions about future investment returns. The ongoing property crisis and real estate turmoil clearly lie at the root of this uncertainty, especially because falling real estate values have hurt household wealth and accordingly left questions about China’s general economic growth prospects.
Some emigrants, in explaining their decision to leave China, reference the downgrading in the country’s financial outlook by two credit rating agencies, Moody’s and Fitch. A motivator left unsaid, and for obvious reasons, is the hostility that the Xi regime has shown in the past to privately owned businesses and personal wealth generally.
In the past, Singapore was the most popular destination for such migrants. But recently, Singapore has stepped up its scrutiny of inbound Chinese wealth. Even those who have nothing to hide might prefer to avoid the bother and loss of privacy now implicit in a Singapore haven. As indicated earlier, Canada and the United States remain popular alternatives for Chinese money. The United Arab Emirates has also gained popularity, offering, as it does, zero income tax, a luxury lifestyle, and so-called golden visas that make the movement of investment funds easy and private. Japan, too, has gained popularity because of its proximity to China, attractive lifestyle, and ability to advertise itself as one of the safest countries in the world.
China is not the only country seeing an exodus of high-net-worth individuals and families. South Korea and Taiwan have also witnessed such departures. In the case of these two countries, security, more than economics, is the paramount concern. For the former, the belligerence of North Korea looms large. For Taiwan, it is communist China’s belligerence that prompts people to move their life and their families out of potential harm’s way. Questions about the willingness of the United States to defend Taiwan have no doubt had an effect.
For China watchers, this news on out-migration carries two telling messages. One is that it makes a clearly negative commentary on Xi’s economic management. Second is that the departure of this wealth will make Beijing’s efforts to revitalize China’s economy that much more difficult, though there is no way to quantify this effect.
