The rigid restrictions of the zero COVID policy, the CCP’s tense relations with the United States over Taiwan caused China’s stock markets to plummet. The economic crisis and the risks of a recession caused many of China’s high-net-worth individuals to leave the Asian country in search of better living and economic conditions for their investments.
While many Chinese millionaires are migrating to the United States, Canada, Australia, and the United Kingdom, Singapore seems to be the favorite destination to settle down in for the vast majority of Chinese citizens.
It is estimated that more than 500 families plan to move to Singapore this year and with them goes at least $2.4 billion, according to Singapore media outlet Lianhe Zaobao.
Henley & Partners, a London-based investment consultancy firm, estimates that about 10,000 millionaires in China have sought opportunities to emigrate to other countries over the course of this year. Each person would take about $4.8 million out of China. In total, $48 billion in investments would be lost to the Asian country.
So far, out of the 10,000 millionaires surveyed by Henley, only 4,200 managed to complete their immigration between January and June of this year.
China’s economy appears to be sinking
The latest data on major economic indicators released by the Shanghai Municipal Bureau of Statistics show that in the first five months, China’s exports, investment and consumption were all negative.
Chinese citizens lost confidence in the economy and started saving due to low employment and low income, according to a survey by the People’s Bank of China.
Businessmen, bankers, and customers believe that China probably fell into an economic recession in the second quarter.
Experts said that if the CCP insists on its zero COVID policy, it will be difficult to achieve this year’s target of 5.5% GDP growth.
For example, Lou Jiwei, China’s former finance minister, pointed out that the pandemic prevention policy has hit the economy hard with the impact of shutdowns and strict control and disruption of industrial chains, has had an adverse effect.
The World Bank also forecasts China’s GDP growth for 2022 to be 5.1% to 4.3% in the latest Global Economic Outlook, citing that the impact of the pandemic and lockdowns is greater than expected. Renowned international investment banks Goldman Sachs, JPMorgan Chase, and UBS also lowered their forecasts for China’s GDP growth this year to 4%, 3.7%, and 3% respectively.
At the same time, China’s real estate industry is caught in an unusual “mortgage revolt,” with homeowners refusing to make loan payments because they believe developers will not complete construction and renovation projects or have already run into problems.
The real estate crisis could cause problems for the CCP’s finances, as provincial governments derive much of their revenue from taxing land sales.
On the other hand, the geopolitical tensions of the communist regime and Taiwan with Pelosi’s visit negatively influenced the economy and caused stocks to fall.
The Shanghai Composite lost 2.26% to 3,186.27 and the Shenzhen Component lost 2.37% to 12,120.02. Both indices were down more than 3%.
Hong Kong’s Hang Seng Index fell 2.36% to 19,689.21. Alibaba and Meituan also fell 2.85% and 2.11%, respectively. The Hang Seng Tech Index fell by 3.01%.
Amid China’s worst crisis, its inhabitants are looking for better living conditions and a government that will provide stability and economic security for their investments.
Singapore, destination of choice for Chinese citizens
Singapore is considered one of the most important financial and wealth management centers in Southeast Asia, and for several decades it has attracted businessmen and middle-class families from Malaysia and Indonesia. But in recent years, Chinese millionaire immigrants have chosen it as a favorite spot to join local industry.
Chinese immigrants choose Singapore to live in because it places a high value on intellectual property rights protection, encourages business development and the rule of law, and also supports innovation, including digital assets, cryptocurrencies, and artificial intelligence.
With regard to COVID management, Singapore has relaxed its control measures and it became the first Asian country to announce its reopening and normalization plan. Its more flexible immigration policies continue to attract a large number of wealthy individuals.
As a result, sales of luxury condominiums in Singapore rose 64% in the second quarter from the previous quarter, just as inquiries from foreign buyers also increased, according to real estate firm Hedeng Group.
Currently, Singapore’s billionaires are Chinese immigrants who transferred their assets by setting up family offices in Singapore. For example, Li Xiting, co-founder and chairman of Mindray Medical, a former Chinese national, is now listed in Forbes magazine as number four of the ten richest men on the island.
However, recently, although the CCP has not issued explicit rules to tighten restrictions, immigration lawyers say that obtaining passports has become more difficult and requirements have increased. It has also become nearly impossible to transfer large sums of money out of China. According to People’s Bank of China regulations, Chinese citizens can only hold a maximum foreign exchange quota of $50,000 per year. This makes it difficult to leave the Asian giant.
Amid the terrible economic situation and the departure of so many investors, will the CCP be able to survive this severe crisis and attract new investors? We will soon find out.