Many wealthy Chinese are ditching their Chinese passports according to a recent survey by China Merchants Bank and Bain & Co. The report found that 27 percent of Chinese with more than 100 million yuan ($16 million) in investable assets have already migrated and 47 percent are thinking about leaving China.
Even Gong Li, the famous actress, became a Singaporean citizen. So why are so many wealthy Chinese taking foreign passports?
Gordon Chang, author of The Coming Collapse of China, sees dark undertones in the political system as the reason why.Chang argues in an article in Forbes magazine that wealthy Chinese flee becausethe government is consolidating its grip on the economy by boxing out private enterprise. Is that really true? Does taking foreign passports really mean wealthy Chinese are protesting government policies? Reality is very different from Chang’s view.
My firm interviewed 36 Chinese worth more than 100 million yuan who have already migrated or are thinking about it. None reported government interference into legitimate business operations as one of the top five reasons for taking foreign passports. In fact, over 90 percent who took foreign passports kept businesses in China and remained in the country over eight months a year. That hardly sounds like businessmen fearful about limited business operations and the government.
The two main reasons wealthy Chinese took foreign passports were for education and health care reasons. Having foreign passports made it easier to secure visas to seek medical care.
Some families reported wanting to send children to international schools in China, an option off limits to Chinese passport holders. China’s weak education system made some families want to send kids abroad to study.
One wealthy entrepreneur, Mrs. Li, told me, "The education system in China focuses too much on rote learning. It does not allow our daughter to take enough extra-curricular activities like art, so we sent our daughter to America for high school. An American passport makes it easier to get into public school and university and find a job after graduation." In Mrs. Li’s case, she accompanied the daughter to America for high school while her husband stayed in Shanghai for work.
Many respondents also said it was simply easier to travel or work with non-Chinese passports because of difficulties securing visas to America and many other countries. For those who traveled abroad often to shop, having a foreign passport made it easier to get tourist visas.
Severe pollution and a stressful life were two other reasons why wealthy Chinese migrated or were thinking about it. One wealthy Beijing women named Mrs. Wang said, “I am so worried about my son’s health. Rashes cover his face because of pollution. We are considering moving to America or Canada while keeping our business in China. Three million dollars only buys tiny apartments in Shanghai but mansions in North America.”
Many reported similar feelings and plans as Mrs. Wang. In most cases the main breadwinners, usually the men, stayed in China, while the wives and children went abroad to study and enjoy a less stressful life in mega mansions.
Mary, an accountant living in New York, told me she and her two children lived in the United States because there was less pollution there and the pace of life was better than in Beijing. Her husband, a banker with Morgan Stanley, was based in China because of business opportunities. It was hard being apart from her husband, Mrs. Wang said, but the quality of life in America is better than in China, which remains a developing country without all the conveniences of America.
A number of frank businessmen said they had bribed so many corrupt officials on their way to riches that they were worried their patrons might get arrested and topple them too. Many said that if anything serious happened in China like a war or political instability, a foreign passport would make it easier to get out.
Shaun Rein is the founder and managing director of the China Market Research Group () a strategic market intelligence firm, and is based in Shanghai.
He is the author of the upcoming book “The End of Cheap China: Economic and Cultural Trends that will Disrupt the World” published by John Wiley & Sons in the U.S. He does not own shares in any company mentioned. Follow him on Twitter at @shaunrein.