High net worth individuals are fleeing China

According to AfriAsia Bank’s 2019 Global Wealth Migration Review, China experienced the biggest wealth outflows in 2018, a 50% increase from the previous year.

China’s High Net Worth Individual (HNWI) population ranked third in the World according to the same report. Their top three destinations are: Australia, the U.S. and Canada.

Source: AfriAsia Bank’s 2019 Global Wealth Migration Review
Source: AfriAsia Bank’s 2019 Global Wealth Migration Review

China has the second most billionaires in the World:

Source: AfriAsia Bank’s 2019 Global Wealth Migration Review

The ultra-wealthy Chinese are seeing their wealth shrinking as immigration accelerates

According to Capgemini’s 2019 Global Wealth Report, China contributed most to the wealth decline in Asia and globally:

  • Asia Pacific, a global powerhouse for the last seven years, was negatively impacted the most, with China being the key reason by accounting for nearly 53% of the overall Asia-Pacific wealth decline
  • China accounted for more than 25% of the global HNWI wealth decline. Chinese markets lost more than $2.5 trillion in market capitalization due to uncertainties in US-China relations and pressure on the yuan. 

The Chinese HNWI’s total net worth reached $23.6 trillion and ranked second in the world. But getting money out of China is not easy. Currency regulations are strict in China and are designed to prevent large sums of money from leaving the country. The State Administration of Foreign Exchange (SAFE) is the authorized institution that controls foreign exchange, including the amounts of money entering and leaving the country. 

Immigration is a legal way for asset transfer

Even though the top three reasons for HNWI immigration are safety, rule of law and reliable wealth management, but many Chinese see immigration as a legal way to transfer assets out of China. It is common for them to keep their businesses in China while sending money to offshore trusts. It was estimated that all the top 100 wealthiest Chinese have offshore trust set up including Ma Yun:

Tighter capital controls by the Chinese government

The Chinese were the leading buyers for the seventh consecutive year, but the National Association of Realtors reported a sudden 56% drop in their purchase of American home from April 2018 through March 2019, with tighter currency controls by the Chinese government as one of the reasons.

Miles Guo has forewarned people like Ma Yun of the imminent wealth robbery by the Chinese Communist Party in his broadcasts. The Chinese netizens shared a picture of a pig watching another pig being slaughtered when Ma Yun announced his resignation from Alibaba.

After the Chinse Communists took power in 1949, many people were killed or persecuted only because they owned land or factories. Now the wealthy Chinese fear that history may repeat itself. The uncertainty and lack of trust in the government might continue to force some to leave their homeland.

[GM35]

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GM35

Nov. 16, 2019