Many wealthy people are considering leaving China (2024)

Jack ma, founder of Alibaba, an e-commerce giant, is a symbol of how the ruling Communist Party has humbled the rich. In 2020 he dared publicly to criticise financial regulators. Soon afterwards they spiked the $37bn initial public offering of Ant Group, Alibaba’s fintech affiliate, and investigated Alibaba itself for monopolistic behaviour. A chastened Mr Ma largely vanished from public life. In late 2021 he left China and spent time learning about farming and sustainable food production.

But after over a year’s absence, Jack is back. On March 27th photos emerged of him visiting a school in his home town of Hangzhou. He was reportedly persuaded to return by China’s new prime minister, Li Qiang. Mr Li is trying to reassure wealthy private entrepreneurs that, though they should know their place, they are still valued by the party.

Rich Chinese are in need of reassurance. China’s draconian controls to stop the spread of covid-19 ended only a few months ago, after three years of disruptions to businesses and a brutal lockdown in Shanghai, where many wealthy Chinese live. Regulatory crackdowns have devastated once-thriving sectors like private education. Officials rage against “money worship” and make tax-dodging celebrities grovel for forgiveness. A government plan to narrow wealth gaps, though now on the back-burner, has some worried they will face more pressure to donate money. On top of that, China’s wealthy worry that they may get caught up in sanctions if friction between China and America increases.

Capital fright

Faced with such headaches, many have been looking to leave. That was hard in 2020-21, when covid controls hit emigration. But in 2022 some 10,800 high-net-worth individuals, who have an average wealth of $6m, left the country, with the flow accelerating at the end of the year as covid controls eased. That is according to data compiled by Henley & Partners and New World Wealth, firms which track the movement of the rich. Even more are expected to leave in 2023, says Andrew Amoils of New World Wealth.

Getting on a plane is easy, moving wealth less so. In theory Chinese citizens are allowed to move only $50,000 out of the country each year. But there are many ways to avoid controls, from visiting shady Hong Kong money exchanges to setting up overseas companies to employ family members. Ten years ago American border officials were picking up Chinese nationals carrying cash in suitcases through airports. More recently, billions of dollars have left the country via cryptocurrencies.

Traditionally, Chinese citizens looked to buy property and other assets in Canada, America or Britain. In recent years, Singapore has been favoured. The city-state is the top destination for Chinese billionaires considering emigration, according to Hurun, a firm which tracks their wealth. Singapore has low taxes, good schools, a booming wealth-management industry and strong cultural links to China. Many there speak Mandarin. Its political stability is also a bonus for those wary of the rollercoasters of American and British politics.

The new arrivals have pushed up house prices and increased demand for luxury cars and high-end baijiu, a Chinese spirit. But the clearest sign of wealth shifting to Singapore is a growing number of Chinese family offices—private companies which manage a family’s assets. According to data from Singapore’s central bank, the number of such offices rose from 33 in 2019 to 347 in April 2022. By the end of 2022 it is likely that as many as 750 Chinese family offices were registered in Singapore, making up about half of the total number, reckons Kia Meng Loh, a senior partner at Dentons Rodyk, a law firm. He expects more will be registered this year.

All this suggests that, even though Mr Ma is back in China, the prime minister’s efforts to charm the wealthy have a long way to go. He is also hindered by clumsy messaging. One provincial government said recently that businesspeople suspected of crimes “should not be arrested unless they have to be”. Similar statements have been made for years.

Another billionaire’s disappearance is not helping either. On February 16th a Chinese investment bank reported that its founder, Bao Fan, could no longer be contacted. Ten days later, the company said he was co-operating with authorities on an investigation. Mr Bao, it turns out, also saw value in moving his assets outside China. In the months before he disappeared, he was said to be setting up a family office—in Singapore, naturally. ■

Correction (April 6th 2023): A previous version of this story referred to Henley & Partners incorrectly. Sorry.

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