Why The Rich Are Leaving China In Droves

January 21, 2014 • Asia, China, World

Share on Facebook0Tweet about this on Twitter0Share on Google+0Share on Reddit0Email this to someone

Why can’t the rich leave China fast enough?

Chinese Premier Xi Jinping has been vocal in his calls for action against corruption

Chinese Premier Xi Jinping has been vocal in his calls for action against corruption

In China, the ultimate power lies in the hands of the government. This may seem like an obvious statement, but whilst money affords great power in China, it doesn’t provide absolute immunity as it seems to in, say, America eg the ‘affluenza’ case or Alice Walton getting away with a clear violation of the law

The latest Hurun Report has found that 64% of China’s wealthy have either left or are planning to emigrate, up from 60% last year – these statistics are drawn from answers given by 393 mainland Chinese millionaires. The United States ranks as the most desirable country to emigrate to, followed by Europe, Canada, Australia and Singapore. The UK is notably popular with parents of secondary school aged children.

But what is it that it driving the rich out of China? In a country where money can buy anything: sex, luxury and status, it doesn’t buy invulnerability from the government. The Chinese Communist Party has been cracking down heavily on corruption, whether or not this has been an excuse to sink political opponents is open for debate, but over 100,000 officials had been punished in the first 9 months of 2013. In amongst these crackdowns there have been a number of cases of missing businessmen, including some of the wealthiest and most prominent people in the country; the most extreme example being Deng Hong. Deng Hong, the billionaire who built the world’s largest building in Chengdu, south-west China, has simply vanished, and since February 2013 has reportedly been held by police on charges of corruption.

The fact of the matter is that practically any major amounts of money made in China is done so in part through corruption, kickbacks and backroom deals. Graft is both non-structural, ie embezzlement or extortion, or much more subtly in its structural form which comes about from entrenched economic and political structures. Patronage networks also facilitate and protect corruption.

Corruption has been a part of Chinese economic culture for so long that leading China expert Minxin Pei predicts it to be a real threat to China’s future, domestically in forms of social unrest and socioeconomic inequality but also beyond its borders in terms of foreign investment, international law and environmental protection. It is as a response to the aforementioned social unrest that the government has been so heavy handed with corruption, most recently in 2013 in an anti-corruption campaign touted by the leader of China, Xi Jinping.

But this phenomenon isn’t anything new. As many as 18000 corrupt officials and employees of state owned enterprises had left China between the mid 90’s and 2008 and had taken over 123 billion USD with them.

In a country where there are an estimated million millionaires , and a government that is increasingly cracking down on corruption it seems like  there can only be further brain drain and capital flight. On the flipside however, foreign-born Chinese are flocking to China, particularly Shanghai, for a piece of the fabled booming Chinese economy.

Enhanced by Zemanta
Share on Facebook0Tweet about this on Twitter0Share on Google+0Share on Reddit0Email this to someone