Experts say the migration of Chinese people and the outflow of money will accelerate China’s social crisis.
As reported, investment and immigration consulting firm Henley & Partners predicts that by 2022, around 10,000 Chinese billionaires with high net worth will emigrate out of China. These people are fleeing from China bringing with them the average amount of money about $4.8 million and the total amount of money fleeing from China is $48 billion, ranking only second in the world (after Russia) in terms of people fleeing (from) the country.
The agency said that Hong Kong is expected to have 3,000 millionaires fleeing abroad by 2022. The exodus may be related to recent social unrest in Hong Kong, where ongoing protests have damaged the city’s long-term appeal.
Expert: The Chinese regime’s institutional problems are the root cause
Tang Jingyuan, a China affairs expert living in the U.S., told The Epoch Times that the Chinese Communist Party is now focusing on making state-owned enterprises stronger and private enterprises will gradually decline. The CCP sees private enterprises as a threat to its public economy, and ultimately uses violence to suppress wealthy populations, which is a major cause.
Tang emphasized that the CCP’s “wolf warrior diplomacy” has made the country increasingly isolated; Politically, the country has become increasingly North-Koreanized, and economically, it has increasingly returned to the planned economy model, making the wealthy feel that they have lost more and more space to continue their careers in China.
Some rich people immigrated overseas with their capital, including the young and once richest female billionaire in Asia, Chinese real estate mogul Yang Huiyan.
Tang said that the “Great Escape” was due to institutional factors. “Unless the institution of the whole (China) society changes significantly, many things cannot be resolved.”
Behind the escape/flight of capital
In order to flee the country, a large number of rich people have moved their assets overseas through offshore investments, property purchases, or offshore trusts.
According to the annual report of the All-American Association of Realtors, the Chinese topped foreigners buying homes in the U.S. with $6.1 billion in 2021, a trend that has persisted since 2013. About 60% of Chinese homebuyers used 100% cash to buy a home. The median home price that Chinese buy in the U.S. is over $1 million per unit, with nearly a third (31%) of Chinese buying properties in California.
The Epoch Times quoted Dr. Xie Tian, a lecturer at Aiken Business School at the University of South Carolina, as saying that, in fact, not only in California, but also in the eastern United States, in New Jersey, New York, Connecticut, and other places like Vancouver, Canada.
He said this money mostly comes from unknown sources of income of corrupt officials. The sudden “evaporation” of deposits at rural banks in Henan is actually a conspiracy from senior managers and local authorities to take advantage of poorly managed banks, in order to get away with the money.
He learned from inside sources that a rural bank with about $6 billion (40 billion yuan) in deposits, and another $3 billion, (20 billion yuan) was used to bribe high-ranking officials of the CCP, all of whom are Politburo Standing Committee members or their families. In addition, more than $1.5 billion (10 billion yuan) was used to bribe local government officials. In the end there was not much money left, so the bank had absolutely no way to return the deposits of $6 billion (40 billion yuan) of the people’s money. After these corrupt officials got the money, most of them will move the money abroad.
Migration wave will accelerate China’s social crisis
Tang Jingyuan said that in the short term, the concentrated migration of rich groups will take abroad a lot of wealth in a very short period of time. The rapid transfer of foreign exchange assets in the short term directly affects China’s foreign exchange system, even endangers the country’s foreign exchange security, and shakes the foreign exchange foundation.
In the medium term, if the “outflow of wealth” is large enough, the base of social wealth that mainlanders can share will decrease. Along with the massive wealth transfer, investment and employment opportunities from mainland businesses will also decrease rapidly. The inevitable result is the widening gap between rich and poor in the mainland.
In the long term, the brain drain of the core groups will lead to a shortage of intellectual and innovative resources in the whole society, and the development of society will be significantly limited or even reduced.
Tang commented: “If a society’s wealth and intellectual elite are lost, it means that society will face a serious crisis… The departure of the social elites will accelerate the social crisis, so it will form a vicious cycle like that. And that is the most powerful effect.”