Rich Chinese Flee, Bringing Their Wealth With Them
Most countries worry about brain drain. China is worried about millionaire drain.
A new report in China shows that 150,000 Chinese – most of them wealthy – emigrated to other countries in 2011. While that number may not seem high for a country of more than a billion people, the flight of China's richest – and the offshoring of their fortunes – could cost the country jobs and economic growth, according to the study from the Center for China and Globalization and the Beijing Institute of Technology.
"The private economy contributes more than 60 percent of China's GDP and it absorbs a majority of employees. So if private business owners emigrate with their capital, it would mean less investment in the domestic market, so fewer jobs would be created," Wang Huiyao, director of the Center for China and Globalization, told the state-run China Daily today.
The fleeing millionaires mainly made their money in real estate, foreign currency and deposits and stocks, among other fields, according to the report. They are mainly leaving Beijing, Shanghai and coastal provinces such as Zhejiang, Guangdong and Jiangsu. (Read more: BRICs Outpace U.S. in Millionaires)
The Chinese government has struggled to stem the tide of wealthy Chinese moving abroad or tunneling their fortunes out of the country. Last month, Zhang Lan – the founder of the South Beauty restaurant chain and a powerful political player – emigrated to an unknown foreign country. She had previously been an outspoken critic of rich Chinese who moved abroad.
When asked about her reasons for moving, her spokesman told China Daily, "It's a private issue."
Officially, Chinese individuals are allowed to move only $50,000 offshore every year. But many Chinese have been skirting the rules and moving money to overseas accounts, or buying property, art, wine and other assets overseas.
The Wall Street Journal recently estimated that more than $225 billion flowed out of China in the 12 months ended in September. (Read more: What Do Wealthy Chinese Women Want?)
The report on emigration said that for Chinese moving abroad, the main reasons cited for leaving are the security of their assets, improved quality of life and better education for their kids.
China's wealth flight, however, has been America's gain. The United States was the top destination for wealthy Chinese in 2011, according to the report. Canada and Australia came second and third.
The report said that the United States had granted 87,000 permanent resident permits to Chinese nationals in 2011. Of those, 3,340 were approved through special investment visas, which allows wealthy foreigners to apply for American citizenship if they agree to invest more than $500,000 on job-creation projects. The program has become largely Chinese, with more than more than two thirds of all of the visas granted going wealthy citizens of mainland.