After three years of lifting pandemic restrictions, many Chinese people are emigrating and leaving China. In the past two years, nearly 25,000 millionaires have left China, according to the latest “2024 Global Wealth Migration Report” released by the British consulting firm Henley & Partners. The report predicts that another 15,200 Chinese millionaires will emigrate in 2024.
Regarding the mass exodus of Chinese millionaires, Zhao Xiaohui, the convener of the Taiwan “Truthful Talk” Economic Forum, pointed out in an interview with Epoch Times on August 7 that there are roughly four reasons why the wealthy are leaving China.
First, in anticipation of a possible US-China trade war, the United States may impose tariffs of up to 100% on products imported from China. To avoid high tariffs, some wealthy individuals who own companies or factories in China are moving out of the country.
Second, due to the Chinese Communist Party’s policy of “common prosperity” escalating control over the entire society, especially over the wealthy class, it is leading to the flight of funds.
Third, there is no hope in the Chinese economy, with no money to be made in society as a whole.
Fourth, over the past 20 years, much of China’s wealth has come from soaring property prices. However, now the real estate market in mainland China is collapsing, continuously declining without reaching a bottom. Data from the National Bureau of Statistics of China released on July 15 showed that in June, in 70 large and medium-sized cities nationwide, the selling prices of new residential buildings decreased by 0.5% in first-tier cities, 0.7% in second-tier cities, and 0.6% in third-tier cities. Goldman Sachs predicts that there is still a 40% room for decline in property prices in China.
Zhao Xiaohui remarked, “If prices continue to fall, the value of the real estate they hold will be wiped out. When that happens, they won’t have any money to take out of the country, so they are hurrying to leave.”
According to a report released by the Hurun Research Institute in March this year on the brand preferences of China’s high-net-worth individuals, nearly 40% of the surveyed high-net-worth families are considering relocating overseas. The “2022 World Migration Report” released by the United Nations Migration Agency shows that China is the fourth largest country in terms of emigration.
Apart from the mass exodus of millionaires, the middle class, facing bottlenecks in development under political pressure, is also accelerating its exodus from China.
Zhao Xiaohui pointed out that the middle class in China mostly excels in industries related to technology and the internet, which have always been subject to the “curse of 35”.
Due to long working hours becoming the industry norm, older employees find it difficult to keep up with the high-intensity work and become targets for lay-offs. This has forced them to “vote with their feet” and leave China.
Dominic Volek, Managing Director of Private Clients at Henley & Partners, expects that this year, the top five destinations for migration of millionaires from China will be the United States, Canada, the European Union, Singapore, and Japan, with Hong Kong ranking sixth.
Zhao Xiaohui mentioned, “Although Hong Kong used to be a preferred destination for Chinese millionaires to emigrate to, the entire city has now become sinicized. Hong Kong no longer boasts its past glory in politics, finance, and freedom, and its economy continues to decline. Adding to that, the upcoming increase in social control, Hong Kong is no longer as appealing as before.”
It is estimated that Hong Kong lost a total of 9,300 millionaires over the past five years due to the anti-extradition law amendment bill movement and the pandemic.
How does the mass exodus of millionaires from China affect the country’s economy?
Zeng Jianyuan, Associate Professor in the Department of Hakka Language and Social Sciences at National Central University in Taiwan, pointed out two impacts.
“The first is capital outflow, which will have a fundamental impact on the industrial development of mainland China, or the global need for more research and investment in intelligent and technological industries.
“The second is the ‘collapse of confidence’ because these people in mainland China are elites, owning assets and having considerable financial capabilities. They have a significant influence on government policies or the party-state, especially considering mainland China’s economic model of party-state capitalist.
“These asset classes mostly have intricate party-state relations. Their massive exodus will lead people to lose confidence in the future of the country, potentially causing political turbulence or shocks. The political and economic situation in mainland China could accelerate its decline due to the exodus of millionaires.”