Ironclad, seemingly never-ending lockdowns of financial capital and quixotic, brutal crackdowns on major industries don’t inspire confidence among high-income earners? Who would’ve guessed?
China’s President Xi Jinping tried the experiment anyway. Now, investment migration consultancy Henley & Partners estimates that 10,000 high-net-worth residents of China want to pull $48 billion from the country this year.
The Xi Market
Jinping’s approach to the pandemic, built around a zero-Covid strategy, included five weeks of strict lockdowns in Shanghai earlier this year that led to residents shouting and banging pots and pans from their homes in protest. Last month, a rare public demonstration broke out in the city among shopkeepers demanding compensation for the damage done to their livelihoods.
At the same time, Xi has thrown regulatory hammers down on some of his country’s biggest tech companies. The first wave of crackdowns wiped $1 trillion off markets. Subsequent crackdowns included a ban on nearly all for-profit tutoring conducted by education firms and a total ban on mining, trading, or sending digital currency — wiping away trillions more. With that economic backdrop, it’s little wonder that many of the Chinese with the most wealth to lose want out:
- In Singapore, the number of family offices almost doubled last year, according to the Monetary Authority of Singapore, as Chinese entrepreneurs moved their families abroad.
- Emigrants are also running out of time and ways to get their cash somewhere else — Chinese citizens can only convert $50,000 worth of yuan into foreign currency in a single year. Tricks to get around that cap, such as using cryptocurrencies, are quickly being banned.
“It’s just easier to put China aside for now when you see no end in sight from Covid Zero and the return of geopolitical risk,” Matt Smith, investment director of $31 billion investment firm Ruffer, which shut down its Hong Kong office, told Bloomberg.
The Biggest Loser: China is second among countries in Henley & Partners’ forecast of high net worth exoduses. Number one, no surprise, is Russia with 15,000 emigrants expected this year.