Almost half of China's wealthy covet foreign passports

Despite the financial turmoil in the US and Europe, almost half of China’s rich are considering moving to the developed world to protect their wealth, educate their children and retire, signalling a lack of confidence in China’s rapid economic growth.

About 14% of wealthy Chinese – those owning assets worth at least Rmb10 million ($1.57 million) – are applying to emigrate or have already done so, while 46% are considering moving to a rich country. Their favourite destinations are the US and Canada, according to a survey conducted by Bank of China’s private banking unit and Hurun Research Institute.

The two firms interviewed high-net-worth individuals (HNWI) in 18 cities between May and September this year and received 980 valid questionnaires. The average age of the respondents was 42, with an average net worth of more than Rmb60 million.

Former leader Deng Xiaoping introduced the idea of promoting economic reform by letting some people get rich more than 30 years ago. The success of the resulting economic zones has come at a cost: widening the wealth gap that Mao had strived so hard to narrow in the 1920s. The growing inequality has led to anger and frustration among China’s have-nots, who are paying the price for the country’s growth in the form of a deteriorating environment and concerns about the safety of their food.

Such worries affect the rich, too, which is why so many are choosing to acquire foreign passports — a life-jacket that only the wealthy can afford to obtain, offering sanctuary in case things go wrong in the country.

Some 40% of the respondents picked the US as their ideal emigration destination, while 37% chose Canada, 14% Singapore and 11% Europe. Just 5% picked Hong Kong.

For the Chinese, home is where you own property, as indicated by the fact that a third of wealthy respondents to the survey had already bought property overseas, with those assets accounting for nearly a fifth of their total investments. For those who do not yet own overseas assets, around 30% plan to buy something within the coming three years.

The Private Banking White Paper 2011, released on the Hurun Research Institute’s website, showed that real estate and manufacturing, as well as financial investments, were the main source of income for 20% of rich Chinese, adding that the financial, entertainment and retail sectors are most likely to drive the next generation of China’s wealthy.  

The paper also showed that 98% of these individuals claimed their wealth was self-made, and more than 60% said they would pass their assets to their children. Beijing has the biggest community of wealthy people with 170,000, followed by Guangdong, Shanghai and Zhejiang, which are home to 157,000, 132,000 and 126,000 HNWIs, respectively.  

Despite their deep pockets, 15% of respondents said they do not donate to charity.