Hamartia Antidote
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- Immigration consultants say anxiety is spreading among rich Chinese about their assets as President Xi Jinping starts his third term
- China’s sluggish economy, a slump in the real estate market and zero-Covid are all fuelling concern about the country’s policy direction
Uncertainty over policy direction under President Xi Jinping is causing more wealthy Chinese to make queries about overseas visas, immigration consultants say
In early November, amid a resurgence of coronavirus outbreaks across China, a luxury hotel in the southwestern province of Sichuan was fully booked with hundreds of immigration consultants for a three-day summit.
The event in Chengdu was held not long after the 20th party congress, a pivotal political event that consolidated Xi Jinping’s grip on power while triggering broader concerns about Beijing’s policy direction.
The party congress did little to allay foreign investor uncertainty and domestically there are expectations of a resurgence in emigration among wealthy Chinese over the next few years, despite the shadow of high global inflation and a looming recession.
Immigration consultants say anxiety is spreading among rich Chinese and upper middle-class families. As China’s sluggish economy and slumping real estate market shrink the value of their assets, high-net worth individuals are speeding up visa applications to buy a pathway to citizenship overseas.
“My peers have said their firms have seen inquiries increase a few times over since May and they keep growing by the day,” said Danny Cai, who runs an immigration and overseas study consulting firm in Zhejiang province.
“The clients are like frogs in warm water and suddenly they feel it boiling. We are realising that China is at a crossroads and new political and economic policies may bring enormous uncertainties and risks to their wealth.”
To address social inequality, China’s new leadership has identified “common prosperity” as a major economic task. Xi’s report to the 20th party congress signalled more robust regulation to evenly distribute the spoils of China’s rapid development.
In a brief announcement, the president said there would be tighter oversight of the way wealth is accumulated, shaking the confidence of private entrepreneurs and the rich.
“I was hesitant about emigration in the past, but recently I finally made up my mind. Some close friends around me think the same way,” said Fang Li, whose husband is a co-founder of a private company in Guangdong province producing fast consumer goods for both domestic and overseas markets.
She cited the “abnormal life” her children would have to live under zero-Covid as a reason for leaving, as well as the potential break from 40 years of economic policies that have seen an explosion of wealth in China.
“We are so worried because we don’t know how a socialist market economy in the new era will change society and impact what we own today and into the future,” Fang said.
According to a January survey by the Hurun Report Research Institute, some 32 per cent of 750 high-net-worth Chinese – with average assets of 42 million yuan (US$5.8 million) per family – said they are considering emigrating this year, up from 14 per cent last year. Six per cent of respondents said they had already filed an application for a foreign visa.
Recent signals from the government have made more people nervous, according to Cherry Ma, a Chongqing-based immigration consultant.
“Everyone has questions about whether there will be harsh campaigns against the private sector and the rich,” she said.
In January, Henley & Partners, an investment migration consultancy based in London forecast that 10,000 Chinese high-net worth individuals would emigrate this year – one per cent of China’s high-net worth population.
The actual number may be higher due to lockdowns, including a two month citywide shutdown of Shanghai in the second quarter, and concerns about new economic policies.
China, including Hong Kong, is among the top five countries for net outflows of rich citizens in 2022, according to Henley & Partners’ third-quarter Investment Migration Insights. The results align with the large number of enquiries and applications made lately.
By the end of the second quarter, more than 66 per cent of web enquiries from East Asia were from Chinese nationals, and Chinese enquiries increased by 134 per cent in the second quarter from the previous three months, the report showed.
Many clients in China who put their migration plans on hold in 2020-21 due to the initial outbreak of Covid-19 have revisited them and resumed applications, it said.
In terms of programmes attracting the greatest deal of attention in East Asia, the Portugal Golden Residence Permit programme tops the chart this year, followed by the Grenada Citizenship by Investment programme and Malta’s Citizenship by Naturalisation for Exceptional Services by Direct Investment, Henley & Partners said. Greece’s Golden Visa programme, St Kitts and Nevis’s Citizenship by Investment programme, and Dominica’s Citizenship by Investment programme also received a fair share of requests
A growing number of rich Chinese and even the middle class are paying for residence and citizenship through investment, which offers them location fluidity and the option to relocate at any given moment between two or more “home” nations.
It usually takes a few months to get a second citizenship, which comes with a price tag of between US$250,000 and US$1 million, according to industry insiders and product packages.
Still, no matter how keen high-net-worth Chinese are, moving most of their wealth abroad is difficult, said Dong Shige, a veteran immigration and overseas investment specialist from Shenzhen.
Relocating more than 20-30 per cent of assets overseas is hard because a large portion is usually invested in domestic properties and the financial market, he said. Anyone looking to shift wealth to another country must contend with harsh capital controls and a weakening property market, he added.
A Chinese man in his 30s, who asked to remain anonymous, said last week he invested US$200,000 into Grenada National Resort, which will entitle him to a passport from the Caribbean island nation.
Grenada has a bilateral agreement with the US for an E-2 visa, which allows individuals and their family members to live and work in America. Grenada citizenship also allows access to China without a visa for up to 30 days a year.
Though he already has a B1 and B2 visa to travel to the US, and bought a property in Athens for €280,000 in 2018, he and his parents – well-known private entrepreneurs in southwest China – still think it is unsafe to be in China in the future.
“The social and political atmosphere is becoming more tense in my city … My parents would stay to wait and see, but my children and I definitely need to leave first,” he said.
He Huifeng in Chengdu
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