China's "wealth drain": Its rich emigrate
June 13th, 2011
02:31 PM ET

China's "wealth drain": Its rich emigrate

Editor’s Note: The following article was originally published in Economic Observer. English versions of their articles, and others from top global media, are produced by Worldcrunch.com.

By Xin Haiguang

BEIJING – Is China facing a "Wealth Drain"? Do too many of the best and brightest - and above all, richest - Chinese dream of packing up their accumulated capital, and going to live abroad?

According to a new study, a majority of Chinese who have more than 10 million Yuan ($1.53 million) worth of individual assets find the idea of real-estate investment a lot less tempting than so-called “investment emigration.”

Nearly 60% of people interviewed claim they are either considering emigration through investment overseas, or have already completed the process, according to the 2011 Private Wealth Report on China published by China Merchants Bank and a business consulting firm Bain & Company.

The richer you are, the study suggests, the likelier it is that you resort to emigration. And among those who possess more than 100 million yuan, 27 % have already emigrated while 47% are considering leaving.

The fact that more and more rich Chinese are seeking to emigrate is turning into a hot topic in China, and statistics prove that the trend is a real one. According to Caixin online, a Chinese website specialized in finance, the compound annual growth rate of overseas investment by Chinese individuals approached 100% between 2008 and 2010. The compound growth rate of the Chinese who used investments to emigrate to the United States in the past five years is 73%.

So why are wealthy Chinese so eager to leave their country? The simplest answer is that there are a lot of things in China that even the richest cannot buy (emigration is obviously not one of them). China’s rich are fond of saying that nothing “is a problem if money can solve it.” Among the irresolvable problems that spark emigration, there are material ones, and emotional ones.

The former includes issues like laws and regulations, the education system, social welfare, inheritance tax, quality of air, investing atmosphere, food safety, ability to travel, and so on. In short, these are the material factors that any State must provide to its people in order to ensure their happiness. In emerging countries such as China, these factors are still often found wanting.

Read: China leading to worldwide wine speculation.

Emotional reasons behind rich people’s immigration are generally linked to the lack of a sense of personal safety, including safety of personal wealth, as well as fear about an uncertain future.

It thus appears that it is a certain “lack of well-being” that is pushing wealthy Chinese to emigrate. The results of the Private Wealth Report are very much in line with other studies. A recent Gallop Wellbeing Survey showed that most Chinese people feel depressed, even as China has sky-high economic growth rates that Europe and America can only dream of. According to the survey, which asked respondents to choose between “thriving,” “struggling,” and “suffering” to describe their situation, only 12% think themselves as “thriving,” while 17% describe themselves as “suffering,” and 71% “struggling.” The number of Chinese who feel that their life is improving is comparable to the number of Afghans and Yemeni who feel the same way, while the number of persons feeling they are “struggling” is approximately the same as in Haiti, Azerbaijan and Nepal.

It is a paradox that, in a country where more and more people are getting richer by the day – albeit to the detriment of the poor, who have benefitted very little from the country’s new wealth – the general feeling of well-being should remain at rock-bottom. The poor grumble while the rich flee.

Read: Building China with a wrecking ball.

The truth is that, unless they emigrate, the wealthy have to suffer from the same causes of unhappiness as the poor. Take food safety. Last year, when a Chinese woman living in Canada was asked by theInternational Herald Tribune why she had left her country, she said it was because of the Sanlu (toxic baby milk) case, and also because of the “hatred against the rich.” Her answer highlights the fact that, as the gap between the rich and the poor is getting wider, and the poor are complaining more and more, the rich are also getting more nervous. Some rich people even worry that the “redistribution of wealth might start all over again.”

Although the danger seems overblown for now, people are starting to wonder where the public hatred of the rich might lead. The wealthy also know that they bear some of the responsibility for the unequal distribution of wealth. The so-called “original sin of wealth” is not totally without foundation, and it is often difficult for the rich to stop enriching themselves. Fluctuating market conditions bring out a survival instinct that sometimes makes them commit illegal or immoral acts. Once they realize this, they often chose to avoid the trap by emigrating and starting afresh.

The situation would not be as serious, of course, if the number of people deciding to leave were low. But once a few personal choices take the shape of a massive drain, the consequences of their departure on the economy and on society, through the example they set, can be dire.

Read: Dark journey to Daraa.

An even bigger cause of concern is that, when rich people pack their money and leave, not only are they no longer identifying with their country, but they are also avoiding their social obligations. While the reason behind these people’s decision matters little, the undeniable fact is that they make money from this society, but they refuse to give anything back.

Rich people who decide to move to a foreign country should know that, by doing so, they are stoking the dissatisfaction among those who stay behind. The poor get angrier because they cannot leave, and their hatred towards the remaining rich grows even bigger. This is the most corrosive thing that can happen to a society.

The views expressed in this article are solely those of Xin Haiguang. All rights reserved ©Worldcrunch – in partnership with the Economist Observer.

Post by:
Topics: China

soundoff (113 Responses)
  1. peter klika

    And another factor: Being rich in China doesn't mean that someone with governmental connections won't try to take your wealth away. The Chinese legal system is still run by the communist party and if they want to confiscate your wealth, they will. I don't know any wealthy Chinese (and I know many) who do not already have a second passport, a bank account in Singapore, a second home overseas, and an exit plan. Peter Klika, Kapaau, Hawaii

    June 14, 2011 at 4:28 pm | Reply
  2. peter klika

    Last, most wealthy Chinese choose Canada over the United States for immigration purposes. Guess why.

    June 14, 2011 at 4:29 pm | Reply
  3. Thatsnotrue:[

    Immagration is not new, all the country want the rich to come to their's (ex. Singapore), and how is it draining when there's soo many outside investments in China. It's not only the rich, the middle class even the lower classes can to...........why's this article dead set as if only the wealthy can get out of the country.......there's three kinds of immagration, refugee, working class, and investors........why focus only on investor??? Immagration happens daily in our GLOBALIZED world.........dear author please look up immagration laws and regulation, this is making a soap opera out of a penny/yuan.

    June 14, 2011 at 4:51 pm | Reply
  4. craig sanes

    Indeed, it is a corrosive event, but one that is only ancillary to the reattributifve and caustic preconditions that make such an event inevitable, namely, the countries third world infrastructure.

    We see in China a country that had has almost flawlessly attained its yearly economic growth goals year after year. we see a country that has taken multiple and highly investive routes in developing its globallized assets. And we see a country that, all be it very dichotimous and uneven, has managed to at least entrench its financial institutions well enough to be considered, at many levels, reliable and accountable.

    And yet, ultimately, what we have not seen in the country, as is evident with the mass emmigration, is the development of a country that is 'insurable'. As with Chevez and the oil and banking industries in Venezuela, the irretrievably disproportionate exchange within the diamond industry of Africa, and, of course, with the whole of an entirley exploitive regime of Afhanistan ( the list goes on),.. China, even considering all its unquestionably upward developments, too, falls well within the sam catagory. Under the countries current proprietary laws, at any time, the government may seize land from anyone. And for that matter all assets of individuals, public or private, corporate or non, are perpetually in jeopardy.

    There are no system of checks and balances as we have in our country. For all our faultering ways, and declining economic environment, here, nonetheless, it is a given that, with responsibility and caution, one can always 'insure' their investments. Small wonder that the wealthier chinese are heading our way. And objecitvely speaking what better combonation than having an investment environment that is secure give reception to those who have proven to be able to handle their finances, be they entities public or private, corporate or non, more responsibly than we have.

    Moreover, distasteful for nationalistic sentiments or not, for the purposes of globalized development this does not necessarily mean the underscoring of the economic competition between our countries. Lets face it, we have already incured a huge debt to them, and there investment here will only help us in our own efforts to stablize our economy.

    And for the future, this could very well turn out to be lucrative for both sides. China is facing unavoidable transparency down the road in the face of impending hyper-inflation. Already, and perhaps for the first time, the country faces the real delema, the same one we carp on about with regards to them, of having the labor markets of other countries out compete them. All the while, America will try to push for continued renovation of our own domestic output. With China's ever, though be it not yet made public and transparent, valuating currency this opens the door for America, again, to play the role of major exporter. Though that market would, for certain, be a very specialized one.

    Either way, this is the direction that things are moving towards. Until suck time China develops the necessary system of checks and balances needed to ensure domestic investment and long term security, American soil will always be the more attracive place to plant ones dollars and watch them grow. And more importantly this does not mean it will have to be the undoing of either nation, rather, that we have come to a juncture where an uncertain future has very furtive possibilities, but only as seen in a global community.

    June 14, 2011 at 5:09 pm | Reply
  5. craig sanes

    Sorry about the typos of my last post. I just blundered right through that.

    June 14, 2011 at 5:15 pm | Reply
  6. 刘锦升

    In fact I hate our Gov most!

    June 14, 2011 at 5:29 pm | Reply
  7. woodrow

    We'll take your rich and your spoiled. We have many imported poor to serve them.

    June 14, 2011 at 5:56 pm | Reply
  8. USminority

    hA! How's it feel to be American? Hiding your income from the government. Moving abroad to a place that tickles your fancy. Getting away from those effin haters. You finally understand that culture and tradition are for lesser forms of life and we are the only true Gods that ever existed! Your all invited to ma xmas party!

    June 14, 2011 at 5:59 pm | Reply
  9. Jon

    We got more Mexican's that Mexico. I sure as heck don't want those rich cowards from China waggin in over here bringing their 8th rate "culture" with them.

    June 14, 2011 at 6:46 pm | Reply
  10. anonymous

    I find it interesting that the author, Xin Haiguang, waves away China's abysmal "laws and regulations, the education system, social welfare, inheritance tax, quality of air, investing atmosphere, food safety, ability to travel, and so on" as due to its "emerging" status as a nation. No one ever called the Soviet Union an "emerging" nation. No one ever quantified Afghanistan under the Taliban as "emerging." China is one of the oldest civilizations on the planet. Its woes aren't due to it "emerging." Its brutal totalitarian regime simply sucks... that's all.

    June 14, 2011 at 7:07 pm | Reply
  11. roger watson

    they come to vancouver ,there are areas here like richmond that are virtually all asian where a crappy house is a million dollars

    June 14, 2011 at 7:13 pm | Reply
  12. Yu Lin

    Yeh, some moved into my neighborhood and started up The Bamboo Curtain Restaurant. They do all Bill Gates takeout service.

    June 14, 2011 at 7:31 pm | Reply
  13. Jeff

    I refuse to enrich the Chinese. They are unethical, cheating people. I'm doing my part for America. I don't buy Chinese crap. You?

    June 14, 2011 at 7:37 pm | Reply
    • oodoodanoo

      You own a computer. The innards were designed and assembled in China. Congratulations, and welcome to reality.

      June 14, 2011 at 10:21 pm | Reply
    • justice

      the same to any nationalities there are cheaty people and there are very kind people in every nations,so donot generalised on just Chinese and most of all DONOT BE NARROW-MINDED – now is a 21st century we friends with all international people...

      June 15, 2011 at 6:43 am | Reply
    • Marx

      Wow....stereotypical american. "I'm doing my part for America"...you mean getting brainwashed by your government into thinking China is the enemy when the enemy is actually your politicans?

      June 16, 2011 at 2:21 pm | Reply
  14. ScubaDeb

    I think it's horrible that western countries, including the US and European nations, have prostituted themselves for money. When despots come here, or educate their children here (Kim Jong Il's son educated in Switzerland, and on, and on..), they don't appreciate the freedom afforded them and pay it forward in their own countries. So many take their ill-gotten gains and live large and unapologetically here. (BTW: another prime example is the Russian mob overrunning the South of France.) Let's quit taking the rich, especially coming from countries where corruption is rampant. That's the only way the world will change.

    June 14, 2011 at 7:55 pm | Reply
    • justice

      yes not just the wealth but the good references before let them into the countries...we must not let Money plays the power!!!

      June 15, 2011 at 6:46 am | Reply
  15. DRC

    People must know that the problem today is still unequal distribution of money to the rich and poor. not being communist or socialist, just saying that, even if you look at an office, those at the top most of the time dont do as much as the common workers do, and they justify their high salaries by saying that it is because they know more or better – not always true. how many times have you heard that a child of the owner inherits a business just because he is a child but in fact, he's not at all the brightest one to handle the position?

    Unless this does not go on, there will always be a problem with money. in china, in europe, in america, where the simple stuff they get, like factory clothes and fruits, they would better off give the labor to someone else for a low salary. but now that they want more jobs for themselves, their having a hard time doing so, because they gave so many low income jobs away that if they were to get it back for a reasonable salary they have to raise prices in doing so.

    June 14, 2011 at 8:23 pm | Reply
  16. ConfuZeuS

    Yeah they packed and scattered abroad like a pack of wolves. They will start a modest business there and would capitalized anything they could get. From tax breaks, freebies to hiring illegals and promot cheap labors. And as the business going good, they would attract and invite other foreign investors to expand or create a bigger business. They would target the masses by venturing into businesses which involves basic and common commodities. They will either make business ties or directly bribe some crooks in the government to back them up whatever they do. Then they will create a cartel together with other companies with the same nature of business to indirectly monopolize it and get rid of the competition. They would manipulate prices and make it dance in the tune of cha-cha, which is 3 steps increase and 1 step decrease that would double or tripple the price of a certain commodities in just span of one or couple of years that would give the same effect to their capital and investments. But they will only give the (other foreign) investors a handful of it and sack all the money and ship it back to China.

    And also in effect, inflation rate in that particular country they're in will simultaneously rises. And if a country economy becomes unstable, probably it will resort to borrowing. Then the question is what country it would likely to borrow? I think there's no need to mention the answer. So it's like hitting two birds in one stone.

    But it was just a part of a grand scheme there still some more like flooding their junks (ie. appliances, computers, gadgets, cars, fashions) and smuggled items in all markets of the worlds with predatory prices to kill it's competing businesses. They will promote cheap labor or persuade other business to export jobs to China for cheap labor. That will cause closure of some businesses and sky-rocket the unemployment and inflation rate.

    And Grandest and the most effetive part of the scheme that plays a big role in the economic downturn were....banking and credit cards.

    China's big and reputable banks will used their good reputations to deceive American huge investment firms.

    The strategy was simple yet very effective. They were indiscriminately issuing credit cards with high credit limit to those people who neither have a substantial deposits nor the capacity to pay. They will just sold their uncollectibles I mean, receivables with a discount to huge American Financial firms. And those firms end-up losing huge amount of money from collection jobs and filling of charges against to debtors that at the very start don't have the capacity to pay.

    So in the article's title saying and I quote, "China's "wealth drain": Its rich emigrate". Nope, they are not packed to leave, they are sent as economic mercenaries and they keep on sending more until China ultimately rule in the economy.

    In the end China will rise while other countires will fall down the drain. And that includes but not limited to US.

    June 14, 2011 at 9:00 pm | Reply
    • vu

      You are definitely dreaming my Chinese comrade.

      Keep on believing in your fairy tales. There are a lot of "if's" in your fictional scenario, most of which are far fetch. I'd have more luck winning the lottery than what you say will happen.

      By the way most of the Asians that immigrate into USA are happy. And what the article says is true, we do not identify ourselves with our country of origin once we leave. I, being prime example, was born in Vietnam and immigrated here and do NOT consider Vietnam my country. There isn't a better way to prove it than to enlist in US military which I did.

      I speak the same for all Asians AND immigrants. Once they get a taste of the GOOD LIFE that CHINA DOES NOT HAVE they will never ever pledge allegiance to their old country.

      The bottom line, people care about THEMSELVES. If some person or some country takes better care for them they will honor that other person or country. Not this stupid idea of yours that you think they care about their 'motherland' China, which the government DO NOT care for them either.

      You want proof, IF you ever have money to get out of your poor neighborhood in China and travel to Irvine, California you can come see how enriched Asians and their children live and prosper and then tell me if they have any allegiance to their former countries, especially former countries that are totalitarian (example China).

      June 14, 2011 at 10:24 pm | Reply
    • ConfuZeuS

      For some perhaps, to those who are "truly migrated for their own welfare. But believe me or not China has economic mercenaries that have been scattered abroad to drain and sabotage the economy of other countries.

      Let me ask you one question, Did ever come across or even in your wildest dreams that how come a Superpower and Federal country like US (in which Irvine and california are part of) "who gave you a taste of good life" OWES Thrillion of Dollars from China a "totalitarian" country that has plenty of "poor neighborhood"?

      June 14, 2011 at 11:21 pm | Reply
      • my dream

        It doesnt matter bill gates or garbage man,chinese or american, the god of death is counting our time (in second!). I better go to sleep now, good night!

        June 15, 2011 at 10:45 am |
  17. chris

    Can it be that China is enforceing more and more regulation in protecting the mass poor and middle income people? The wealth gap is so huge together with corruption is threatening the China communist party. The leaders are forced to introduce tougher regulation fihghting corruption.

    You may ask what it gotto do with wealth drain. Here the fact, most China top wealthy people accumulated their wealth for the last 30 years reform due to political linked (either their are the local authority or political family) and corruption. Only handfull are thru hardwork and spirit of entrepenuership. The tough regulation and action by Beijing are hunted them. Check those migrated to Canada, US and Australia are mostly the corrupted politician and their family.

    This is not just China and most of developing and poor countries. Tones of money they looted from their country are bank-in developed world banks.

    We hope your country can do something like stop providing "heaven" to this blood sucking vampires.

    June 14, 2011 at 10:34 pm | Reply
  18. Rick Springfield

    Its a wise move to leave China as a free run of environmental disasters by the big business is to blame for their rampant cancer rates. But don't feel sorry for those who do leave. As Chinese nationals, they still must report every quarter back to party headquarters. They must list people they met, situations they observed, and anything they learned that may help the Chinese government. Lets say they leave and get a job at an American company or even become a board member. Many times issues discussed at board meetings are highly confidential. But a Chinese citizen is sworn by law to report that information back to party headquarters. So China has the best spy network on Earth because every citizen living abroad on this planet is a spy. Every college student, government worker, millionaire, they all are spies. Take a college student studying in the USA. That student my take a subject of nuclear engineering. That student will come in contact with privileged information at some time in their studies. The student must by law, report back to party headquarters all that information gained. So lets say a Chinese student is an intern at a pharmaceutical company. They may be working on a proprietary formula for an important new drug. That student must by law report all formulas and compositions back to party headquarters. So we as as world loose so much to China and they run to the bank with it.

    June 14, 2011 at 10:36 pm | Reply
    • justice

      Are you kidding! is that not just for the curiousity that they discovered in a new country and chat about it with their colleauges? It sounds too exaggerating!!

      June 15, 2011 at 6:59 am | Reply
  19. FairGarden

    Go China, conquer the Sodom America!

    June 14, 2011 at 10:59 pm | Reply
  20. theonedavid

    The Chinese are truely the smartest people on earth. Get rich and leave that wretched country. Brilliant.

    June 14, 2011 at 11:32 pm | Reply
  21. 哈哈

    你们一群扯淡的小子们,在这里高谈阔论,来我们China看看再说吧。

    June 15, 2011 at 12:44 am | Reply
  22. patriot

    Goldmann Sachs makes the absurd claim that the GDP of China will only catch up with the GDP of the US in the year 2030!

    Everybody knows that the real GDP of China is already much bigger than the GDP of the US.

    For instance, the construction industry sector makes up 4% of the US GDP.

    But the Chinese construction industry uses 20 times more cement than the US construction sector, employs over 80 million Chinese construction workers compared to 5 million US construction workers.

    Overall, the Chinese construction sector produces 8 times more building construction than in America, therefore, the Chinese construction industry sector alone is worth 8 times 4%, or 32% of the real GDP of the US.

    Another example is the health care sector which represents 17% of the GDP of the US.

    Since China has 2 times more hospitals, 2 times more doctors and 2 times more health care consultations than the US, the Chinese health care sector is worth 2 times the US health care sector, or 2 times 17%, or 34% of the GDP of the US.

    Therefore, just the Chinese construction sector and the Chinese health care sector alone are worth 32% + 34% equal 66% or two-thirds of the GDP of the US already.

    It is obvious to everyone that the real GDP of China is already at least 2 times bigger than the GDP of the US.

    see http://asians-against-racism.socialgo.com/forum/topic/47

    June 15, 2011 at 2:51 am | Reply
  23. Fabrizio

    I have been traveling to China over the last 9 years, at least 3 times a year, and yes, there are some people who are always looking at the West with admiration, and possibly playing with the idea of moving there, however there are many more people who believe that the Chinese way of living is far better than anything else we have in the West. I tend to agree with the later. Moving from a country that gives you free health, free education (up to a certain level) free benefits, growing economy and state of the art infrastructure to the West where things are falling apart is the typical "the grass is not always greener on the other side of the fence" syndrome. When moving to a new country the Chinese will be alienated in their own communities as they will not be integrated in society, and will always be looked upon as outsiders. The level of education that some Western countries adopt is far lower than China. Level of community interaction is once again way lower than is socially adopted in China. Each country has their good and bad, and I feel that the Chinese people should be proud of what they have accomplished and what they will accomplish in the future, but rather stay in your country as the West is not what you might envisage it being.

    June 15, 2011 at 4:57 am | Reply
  24. justice

    Hi, is this still a free world? They can go where they like and besides these countries only let them in if they have the money to do business so what is about this social benefits and freebies?? come one you guy also benefit from them too when they lives in US they spend, they feed the property companies very good sales targets, they pay their health insurance so there is no such things that they get anything out of the states as they work for it and follow the rules in that countries. (they come with the money donot forget) There are many foreign people in China make good fortunes too such as English Teachers, Texco from UK, Mcmondal Fast Foods, Kenturky Chickens Kitchens etc. the Chinese welcome them, so this is a free world we go to make our own happy life so long within our moral no illegal stuff ok!
    However, If I am a rich Chinese I will never go to US or other countries, I think they should stay in the country to help the poors, the sicks and olds and so on

    June 15, 2011 at 6:34 am | Reply
  25. Rob

    It's bad enough that we have filthy drug dealers and illegal aliens crossing our southern border, now its filthy chinese business scum bags. We need to shut our borders, specifically to keep the flthy chinese government out!

    June 15, 2011 at 7:17 am | Reply
    • Thatsnotrue:[

      Racist

      June 15, 2011 at 3:16 pm | Reply
  26. Jeff

    Having spent the last year and a half in Beijing I can tell you the environment is hideous. The air is not fit for humans, and the tap water will poison you. I just got back from the hospital visiting a Chinese relative who has been there for 4 days with a lung infection. Food safety is a laugh.

    The part that is most bothersome is Americans have no clue how blessed they are, or how corporations are warping the political process. By pushing for less environmental controls and regulation they would put us in the exact same condition without any remorse.

    June 15, 2011 at 7:26 am | Reply
  27. Joe

    Just like the wealthy fom the USA & US corporations

    June 19, 2011 at 1:43 pm | Reply
  28. samuel welsh

    when morons buy from china this happens

    October 14, 2011 at 2:29 am | Reply
1 2

Post a comment


 

CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

Follow

Get every new post delivered to your Inbox.

Join 4,512 other followers