China has over 530 billionaires with individual net worth exceeding $1 billion, amounting to a total net worth of $2.2 trillion. Additionally, there are 5.3 million centimillionaires in the country. Under financial pressure, the Chinese Communist government is forming specialized tax teams to levy taxes on certain high-net-worth individuals. Almost all of these individuals will see an increase in their tax burdens.
Washington can weaken the Beijing regime and enhance democratic development by making it easier for high-net-worth families to transfer wealth from under Communist rule to the United States and its allies. As early as 2025, a record $807 billion flowed out of China. With fewer people sharing the tax burden, this is likely to further fuel capital flight.
Last year, China’s fiscal deficit reached $1.9 trillion. In 21 out of 33 provincial-level regions, fiscal revenue falls short of expenditures by half. This is mainly due to a series of overlapping negative economic factors, including reduced foreign investment, declining real estate prices, stagnant construction industry, rising unemployment rates, currency tightening, and reduced land sales by local governments to developers.
Chinese Beijing and local government officials are now tackling the fiscal deficit issue by increasing tax revenues and strengthening tax enforcement, but this often hampers economic growth and increases capital outflow, creating a vicious cycle.
Undeniably, the Communist regime is in urgent need of funds. Recent reports show that institutions at all levels nationwide lack sufficient funds to pay some employees’ wages. Therefore, they are intensifying tax collection and enforcement on the wealthiest segments of society, including seizing their overseas assets.
“When asked whether taxing wealthy individuals’ overseas investments will eventually help the government resume salary payments, a deputy secretary of a city in central Henan province who has not received wages for a year expressed doubt.” An article titled “China’s Tax Grab Squeezes Rich Elite Harder Than Ever” by Bloomberg News on September 27, 2026 reported, “The official said that given the government’s debt burden, this money will not be used to pay salaries.”
This raises a question: How do these officials receive their salaries? Does this involve corruption or crimes? In 2024, a report titled “Chinese entrepreneurs are being held to ransom” stated that local Chinese officials kidnapped businessmen for ransom to balance local government revenue and expenditures.
At the national level, tax measures are becoming more precise and effective. Hong Kong, foreign brokerages, and offshore trusts can no longer escape the supervision of tax authorities. Beneficiaries of offshore trusts must settle their taxes by late October, or they will face additional charges.
Various businesses also face rectification, including back payment of taxes. Over 100 companies were ordered to repay taxes in the first two quarters of 2026. State-owned enterprises are not exempt. In June this year, China’s National Audit Office accused China Bank, a state-owned enterprise, of tax evasion.
In general, this is a widespread taxation measure targeting various assets that the Communist Party deems outdated, stable, and thus vulnerable to attack. This is the Communist Party’s tried-and-true strategy of “hostage capitalism,” specifically aimed at immobile fixed assets.
In the current turbulent situation with rising taxes, the United States and other democratic market countries not only have the opportunity to encourage but also to compete for China’s high-net-worth individuals to transfer their assets and families to places far from corrupt officials and Communist control. This aligns with US national security interests. If high-net-worth individuals stay in China, their assets may be taxed and used by the Communist Party to deal with democratic countries.
The good news is that the Communist regime’s aggressive tax collection efforts will increase the motivation for wealthy Chinese to engage in capital flight and immigration, weakening the Communist Party’s power and enhancing the economic bodies where high-net-worth individuals migrate.
Judging from the $807 billion capital flight in 2025, many Chinese have already begun voting with their dollars under their names. As customs gates close and control measures tighten, China has become a financial black hole with no exits, and they are rapidly withdrawing their funds.
If new policy measures further promote capital movement, the resulting long-term capital flight from China and the deteriorating environment for foreign direct investment (FDI) in stable market democracies like the United States, the European Union, Japan, Australia, and Singapore may actually be a greater boon.
Democratic countries should encourage Chinese wealthy individuals to move their funds to places safer than under Communist rule, even if it requires new digital and legal avenues. If high-net-worth individuals can prove they are permanently moving their wealth and family members overseas, they should be granted foreign passports. This shows a preference for market and democratic values over the Communist ideology lacking these values.
In summary, to strengthen market democracies economically, the United States should relax restrictions on transferring wealth held by high-net-worth Chinese families. Transferring funds and family members permanently to democratic countries weakens the power of the Communist Party overall.
Author’s Biography:
Anders Corr, who earned a Bachelor’s and Master’s degree in Political Science from Yale University in 2001 and a PhD in Government Management from Harvard University in 2008, is the President of Corr Analytics Inc., the publisher of the Journal of Political Risk. His research spans North America, Europe, Asia, and other regions. His latest works include “The Concentration of Power: Institutionalization, Hierarchy, and Hegemony, 2021” and “Great Powers, Grand Strategies: The New Game in the South China Sea, 2018.”