Rich Chinese Worth $48 Billion Want to Leave — But Will Xi Let Them?
Some 10,000 wealthy Chinese are looking to leave in the wake of punishing lockdowns and an economic slowdown. The question is whether they’ll be able to.Like thousands of wealthy people across China, Shanghai restaurateur Harry Hu is planning to do something he once considered unthinkable: move himself and his money out of the country.
Scarred by Shanghai’s chaotic lockdown under the Covid-Zero policy that has made China a global outlier, Hu is joining what investment migration consultancy Henley & Partners estimates is a cohort of 10,000 high-net-worth residents seeking to pull US$48 billion from China this year — the second-largest predicted wealth and people outflow for a country after Russia.
The big question now hanging over China’s rich is whether President Xi Jinping’s government will let them leave.
While policy makers haven’t explicitly tightened curbs on relocating, immigration lawyers say moving has become more difficult in recent months as passport processing times have increased and documentation requirements have become more onerous. Shifting large sums of money out of China has also become harder after a pullback by overseas counterparties who had long helped residents sidestep the country’s capital controls via private swap arrangements.
That’s setting the stage for a fresh bout of tension between wealthy Chinese and the ruling Communist Party, which was already strained amid President Xi Jinping’s populist campaign for "common prosperity." The government has put a premium on stability ahead of a leadership confab later this year at which Xi is expected to secure an unprecedented third term, but the long-term economic toll on the country of Covid Zero will be determined by the ultimate scope of China’s talent and wealth exodus.
The potential departures of people and capital are “a definite cost to the Chinese economy,” said Nick Thomas, an associate professor at the City University of Hong Kong who has edited several books on pandemics and politics. In almost every country in the world, he pointed out, “the risk from Covid is being built into economic plans and corporate modeling.”
Despite the hurdles to leaving, Hu said he’s intent on relocating to Canada.
“Can you imagine that I almost starved to death at the beginning of the lockdown in the most developed city in China?” said the 46-year-old, who recently sold much of his majority stake in two high-end Shanghai restaurants for 20 million yuan (US$3 million) and has hired an immigration lawyer and wealth manager to help him move. “I am very sad, but it is time to leave.”
Migration consultants and lawyers in China said inquiries grew three- to five-fold in spring — when Shanghai was in lockdown — compared to a year earlier. Inquiries about moving money out of the country have grown exponentially, according to interviews with seven bankers who didn't want to be named because they are not authorized to speak publicly.
Many really felt they had no other options given the Covid lockdown,” said Sumi, a migration consultant in Shanghai who didn't want to give her full name discussing client business. “I’ve seen those who used to hesitate about emigration finally make up their mind this time.”
In another sign of the national mood, a recent note from Shanghai-based billionaire Huang Yimeng announcing to employees that he plans to move his family out of China went viral on social media. The chief executive and chairperson of gaming company XD Inc. did not directly cite the lockdown and XD told Chinese media that Huang’s move was for family reasons. Still, the announcement stoked debate about the growing desire among people to emigrate.
Popular destinations include the US, Singapore, Australia, Canada and places in Europe. Some of these countries have made migration processes stricter or pulled back on investor visa schemes. Places where investment requirements are relatively low — such as Spain, Portugal or Ireland — could also become more popular, one private banker said.
In Singapore, the number of family offices had nearly doubled at the end of 2021 compared to a year earlier, according to the Monetary Authority of Singapore. Demand has grown especially quickly among the families of Chinese entrepreneurs, suggesting the ultra-rich have already made moves abroad.
Still, “there are lots of institutional barriers” to leaving China, said Jennifer Hsu, a research fellow at the Lowy Institute think tank in Sydney, Australia who studies overseas Chinese communities. “You might have that desire, but there are various hurdles — not the least from the China side, let alone from where you hope to emigrate to.”
Just securing the paperwork needed to leave China is proving much more difficult these days.
The Chinese government has been discouraging non-essential travel since late 2020, citing Covid prevention measures as a reason. In May, China’s National Immigration Administration said it will strictly limit unnecessary outbound travel for citizens and tighten the approval of entry and exit documents.
The immigration administration did not respond to faxed requests for comment.
One private banker, who spoke on the condition of anonymity, said a Shanghai-based client had recently tried to get her child a Singapore visa to study but was denied by the local government agency.
Would-be emigrants also need to get savvier at moving money out of China. Citizens are only allowed to convert US$50,000-worth of yuan into foreign currency each year. In the past, wealthier people have found ways around the rule, but some of those options are dwindling.
Just a year ago, viable options for shifting money out of China included using cryptocurrencies or making a private arrangement with an overseas counterpart looking to send yuan onshore. However, China's sweeping crackdown on crypto in the last few years has meant bans on almost all activities including exchanges, initial coin offerings, mining and transactions.
Meanwhile, swap agreements are becoming more difficult to come by as fewer people want to move money into China, according to one Hong Kong-based private banker who declined to be named because he was not authorized to speak publicly.
Beijing resident David, who declined to give his last name due to sensitivities, is hoping a fast-tracked path to a US green card could help him with moving money out of China. The government typically allows those who have obtained permanent residency elsewhere to make a one-time transfer of a large sum of money.
“I think China’s economy is going to face many challenges down the road,” said the 42-year-old consultant, who cited the slowing economy, Covid policies and geopolitical tensions as his motivations for leaving. "The US will probably still provide more opportunities in terms of business growth."
David said he plans to apply for an EB-1 visa — which grants immigrants of extraordinary ability permanent residency — and then set up a business in Texas that uses data and AI to advise the petroleum industry.
While China's recent decision to cut hotel quarantine for international arrivals to as few as seven days has raised hopes that the country may further ease its Covid policies, the inconveniences and uncertainties of the country's approach continue to roil everyday life. Last month, Xi reiterated his support for Covid Zero in a speech in Wuhan, saying it was the most “economic and effective” strategy for China.
Many residents still fear that Shanghai could go into lockdown again as Covid cases persist and mass testing drives have been ordered, while lockdowns continue to be imposed in other cities.
For Hu, the restaurateur, the slight relaxation isn’t giving him any pause on emigration plans.
“I’ve thought about leaving China several times in the past and gave up, but now I’m determined to leave,” said Hu. Despite submitting materials for his visa and passport renewal application over a month ago, he hasn’t yet heard back.
