China’s super-rich are eyeing the exit, New Zealand, Australia on radar - NZ Herald
China’s super-rich are eyeing the exit, New Zealand, Australia on radar
Chinese millionaires and billionaires are trying to get out of the country. Photo / AP
Chinese call it "runxue" or "run-ology" — the study of escaping China and taking your wealth with you. The word plays on the English verb "run", which sounds like a Chinese character "run", meaning profitable. The "ology" hints at the fact that emigrating overseas is no easy task. Working out where to go, how to get there and then finding ways to smuggle your capital out of China can be an obscure science.
The word became popular inside China in 2022, when Beijing’s draconian Covid lockdown incited people to dream of a life abroad. But this year, the "running" has become a concerted sprint for the exit. Record numbers of Chinese millionaires and multimillionaires are expected to emigrate from their homeland this year, building on the record number who left last year, according to a report by Henley & Partners, a UK-based investment migration firm.
The exodus puts China far out in front of a list of countries from which "high net worth individuals" are evacuating for a better life or prospects elsewhere. An estimated 15,200 Chinese millionaires are predicted to emigrate this year, up from 13,800 who actually left China last year, Henley & Partners said.
"This great millionaire migration is a canary in the coal mine, signalling a profound shift in the global landscape and tectonic plates of wealth and power," says Henley’s Dominic Volek.
China’s loss is mirrored by the net inflows of wealthy people into other countries. At the top of the leaderboard are the United Arab Emirates, the US, Singapore and Canada. Japan, where Chinese billionaire Jack Ma sojourned for some months in 2022 after falling out of favour in Beijing, is also seeing inflows of millionaires.
For Xi Jinping, China’s strongman leader, the trend represents a commentary on his rule. His advocacy since 2021 of "common prosperity" included a promise that high-income people will have to "return more to society" for the betterment of those left behind in China’s dash for growth over the past four decades.
On one level, this determination to spread the benefits of China’s rise more evenly was laudable. But the jarring and often arbitrary way it has been pursued – with a crackdown on the property sector, the humbling of private entrepreneurs and official exhortations against "greed" – has swelled the desire to emigrate.
"President Xi Jinping is unfortunately an incompetent leader when it comes to the economy," says Junhua Zhang of the European Institute for Asian Studies, a think-tank in Brussels. "For wealthy people, if they cannot generate more wealth in the country, then the only solution is to change their location."
But once they have decided to leave China, wealthy people face a series of trade-offs. Where to go is the first. Preferred destinations in a world riven by conflict should be safe, so geographically remote places such as New Zealand and Australia are sometimes favoured.
Other locations have rolled out the regulatory red carpet. The UAE and Portugal both have "golden visa" systems to fast-track immigration for wealthy investors, a feature that Chinese have found particularly attractive. The US and Canada also have their own distinct draws – good schools and universities, large Chinese communities and civil freedoms. Japan, for its part, has proximity to China, an Asian culture and good social order.
But perhaps the most challenging aspect of "run-ology" is getting your money out with you. To prevent capital flight, Beijing limits the amount that a citizen can take out of the country to $50,000 in foreign currency each year – a paltry sum compared to the cost of starting a new high-end life overseas.
So many would-be migrants are left with little choice but to turn to "underground banks" to help spirit their wealth abroad. These shadowy institutions deploy numerous sleights of hand to transfer money across borders without law enforcement agencies noticing.
One method is known as the "mirror transfer", under which a sum of money is deposited in one underground bank in China. The same amount is then withdrawn from a reciprocal underground bank in another country. The money never actually moves, leaving little trail for detectives to follow.
The US Department of Homeland Security said in a statement in April that such Chinese money-laundering organisations – which have become among the favoured financial conduits for criminal gangs and drug cartels – were also used by ordinary Chinese citizens simply trying to get cash abroad.
But even after such obstacles to migration have been overcome, wealthy Chinese can find life overseas brings a whole new set of unfamiliarities. Adapting to new food, weather and politics can be tricky. But the more intractable problems are societal.
"If you are a social butterfly who cannot live without social activities, then northern Europe will definitely not suit you," says one Chinese influencer online. "In northern Europe, there is a level of social fear... most people stay within a fixed group of a few friends. So it won’t be much fun..."
Written by: James Kynge
© Financial Times