China’s elite seek safety abroad

For Isaac, a Chinese business consultant in his late 20s, Xi Jinping’s stunning consolidation of power at last month’s Communist party congress was the final straw.

The graduate of a top Beijing university, who asked not to be further identified for fear of reprisals, is hunting for work in the Middle East. As with most of his generation, he is an only child. His parents are “too old” to leave with him, but they are happy he got out at the end of summer.

“If there is hope of change [after Xi] I’ll consider going back,” he said. “Until then, I’m seeking opportunities in other countries.”

Isaac is among a flock of wealthy Chinese taking flight from the world’s most populous country just as Xi embarks on an unprecedented third five-year term in power. Some of those leaving have cited the difficult business environment, others fear the direction of future government policy.

Singapore has emerged among a clutch of favoured locations for rich Chinese as they search for a safe destination for families and assets.

According to interviews with those leaving as well as lawyers, immigration experts and consultants working with wealthy Chinese individuals, the Communist party congress in October was a watershed in how the country’s elite view China’s future.

Attempting to flee carries immense personal and financial risk, however, owing to Beijing’s strict border and capital controls. Even Chinese nationals who successfully navigate the journey to a life abroad remain exposed to Xi’s extralegal security forces.

“In China, they play for keeps. If you’re going to pull the trigger on this, and you screw it up, that’s it. We’re talking exit bans, seizures, money disappearing,” said David Lesperance, a Europe-based lawyer who assists wealthy families leaving China.

While Hong Kong has been a base of operations for China’s wealthiest for generations, with many including Alibaba founder Jack Ma buying homes in the city, its facade of safety has been shattered by Beijing’s crackdown.

Wang Jue, a 35-year-old art collector and investor from Chengdu, south-west China, is among those relocating some assets from Hong Kong to Singapore via a family office, a private entity used to manage a family’s wealth.

While China and Hong Kong have been hampered by strict coronavirus controls for three years, Singapore’s economic and political stability and easy capital flows made it “the best base to venture out into the region”, he said.

The south-east Asian city-state did not have “riots on the street”, Wang added, referring to Hong Kong’s 2019 anti-government protests.

Camilla Jiang, a director at Prime Asia Asset Management in Singapore, said she had already set up seven Chinese family offices over the past year. She also pointed to Singapore’s cultural appeal — Chinese Singaporeans constitute about three-quarters of the city-state’s population.

“We have a client who spent one year in three places . . . because of the demographics, they chose Singapore, she said. “They feel they can be a part of society.”

Before the congress, many wealthy Chinese were already preparing for Xi’s increasingly authoritarian rule and sweeping crackdowns to reshape the country’s business landscape.

Lawyers and immigration experts said some wealthy Chinese clients had already executed exit plans. These involve arranging new citizenships for themselves and family members and moving capital and assets to other jurisdictions.

The richest are also able to tap immigration investment schemes offered by some countries to attract the ultra-wealthy, though the process can take years.

For others who misjudged the pace of change under Xi, speed is now of the essence.

Philippe May, chief executive of investment migration firm EC Holdings, said the most common request from China was “a second passport, quick”.

“We are talking about a few months. It is psychological,” he said.

Such clients are often channelled to Caribbean nations including Saint Kitts and Nevis, Dominica and Antigua and Barbuda.

While wealthy Chinese have for years snapped up prime assets abroad, Keir Waddell, head of London new home sales for real estate group Strutt Parker, said there was “market chatter” about a wave of Chinese buyers in the UK.

“It’s mainly in the prime (£5mn-plus) and super prime (£10mn-plus) markets that we see that interest,” he said, adding that the “pound being so weak” was helping to attract foreign buyers.

But efforts to shift cash out of China have also faced Beijing’s clampdown on capital flight.

“Everyone is saying it’s hard to get money out of China right now. Banks are cautious about big amounts of funds being transferred abroad,” said a Chinese tech entrepreneur who relocated to the US in September.

“I have funding, but my Chinese bank is taking a very long time to review the transfer,” said the person, who also asked not to be identified over safety concerns.

The exodus has also put a spotlight on a murky realm of legal protections afforded to Chinese nationals in other jurisdictions. Under Xi, the reach of China’s surveillance and security apparatus has spread offshore, drawing allegations from the US and others of coercion, forced repatriations and abductions from foreign soil.

Margaret Lewis, a China expert and law professor at Seton Hall University, said pressure from Beijing to return Chinese nationals or assets was “messy” for foreign governments.

“There are real questions,” she said. “Just because there are words on paper [in China] that are called a law . . . Who do you send back? Do you send anyone back?”