Billionaires in China are finding it increasingly difficult to maintain their wealth within the country as crackdowns on financiers and a tumultuous political climate drive many to move their assets and themselves overseas. Out of the estimated 2,640 billionaires worldwide, Forbes reports that at least 562 are currently residing in China, a decrease from 607 last year.
The Chinese elite have been seeking ways to transfer their money overseas for years. Although individuals are officially restricted to transferring $50,000 (£41,000) out of the country annually, wealthy individuals have found both official and unofficial methods to move their funds, including through money exchanges in Hong Kong, where capital controls do not apply.
Recent arrests in Shanghai underscore the severity of the situation. In August, five individuals, including the boss of an immigration consultancy, were arrested on suspicion of facilitating illegal foreign exchange transactions amounting to over 100m yuan (£11,300). According to the police, these illicit activities seriously disrupt the country's financial market order.
Before the pandemic, an estimated $150 billion flowed out of China each year via tourists taking their funds overseas. Although international travel has not fully rebounded, high interest rates in the US and a weakened yuan serve as strong incentives for wealthy Chinese to move their money abroad.
The first half of 2023 saw a lack of $19.5 billion in China's balance of payments data, a key indicator of capital flight. However, economists believe that the true value of unofficially leaving the country may be even higher.
The uncertain economic policies and business opportunities in China are further contributing to wealthy individuals taking their savings out of the country. The call for "common prosperity" by Chinese leader Xi Jinping in 2021, interpreted as a push for billionaires to share their wealth more widely, has also fueled mistrust among China's financial elites.
This shift has led to an increasing number of wealthy Chinese individuals moving not only their money but also themselves out of the country. Immigration consultancy Henley & Partners predicts that about 13,500 high-net-worth individuals will leave China this year, compared to 10,800 last year.
As the Chinese government continues to crack down on business elites, wealthy individuals are seeking opportunities outside of China. This has resulted in an uptick in luxury condo purchases in Singapore by mainland Chinese buyers, with over 10% of sales in the first three months of this year compared to 5% in the same period last year.
The changing landscape has led to entrepreneurs questioning the opportunities and risks associated with staying in China. Entrepreneurs, who were previously drawn by the potential for high profits, now feel the need to protect their wealth and well-being by considering relocation options for themselves and their teams.