While China seems to be an increasingly confident actor on the world stage, within the country, there is a serious lack of confidence in the government, with those who have thrived within the system eager to leave the country, taking their money with them.
Over the past few years, the situation has become worse. Bain & Co., a global management consulting firm, in conjunction with China Merchants Bank, has published three reports on the emerging wealth market in China and the likelihood of emigration.
The first report, issued in 2009, found that wealthy Chinese use offshore investments primarily “to finance immigration, send their children to study abroad or avoid domestic regulations”.
The next report, in 2011, disclosed that “10 percent of the wealthiest have decided to leave the country” while another 10 percent “have plans of doing so and the rest are still considering it”.
The latest report, in 2013, found that “among those mainland business owners who possess more than 100 million yuan (US$16.3 million), 27 percent have already emigrated while another 47 percent are considering leaving.”
Other reports confirm the trend. A survey by the Bank of China and Hurun Report, which ranks the wealthiest individuals in China, found that more than half of the country’s millionaires are considering emigrating or are already in the process of doing so.
The Center for China and Globalization, a Beijing-based think tank, said in its latest annual report on Chinese international migration that a growing number of investors are going abroad to buy property and establish permanent residence in Europe and North America.
“Most of the prospective migrants from China are middle-class people aged between 35 and 55,” said the report, issued in January in conjunction with the Social Sciences Academic Press.
Why are rich and talented people leaving the country?
According to Bain’s Jennifer Zeng, high net earners cite “wealth preservation, education for their children, food and environmental security as the main reasons for considering investment immigration”.
But such concerns are by no means limited to the super-rich.
So it is not surprising that the China Daily reported on June 25 that China’s policymakers are scrambling for solutions to retain talent “as more professionals search for greener pastures outside China”. The headline blared: “Nation frets as middle class heads overseas.”
The Chinese government is clearly upset by publicity about a brain and capital drain. It took issue with the Beijing think tank’s numbers. The official Communist Party mouthpiece, the People’s Daily, rebutted by saying that the nine million-plus number reported was a cumulative number and not that only for 2013. Last year, it said, only 190,000 people left.
Regardless of the actual figures, it is clear that substantial numbers of people are leaving the country or making plans to leave. Surely, that does not suggest great confidence in the Communist Party’s ability to manage the country’s future.
And their new homes are located primarily in countries such as the United States, Canada, Britain and Australia – countries with cleaner air, stronger regulatory environments and, need it be said, democratic governments.
The Chinese government seems to be taking steps to rectify the situation. It is being much more serious about environmental protection and playing down the significance of growing its GDP.
But the damage inflicted on China’s soil, water and air over the past three and a half decades is so grave that it will take a long time before the air is safe to breathe, the water to drink and the food to consume. Over time, hopefully, there will be improvements but the exodus of those who can afford to do so is unlikely to be stanched.
The impact, however, can be alleviated by attracting foreign investment and immigration from overseas.
Ironically, although many Chinese consider life in their country to be a threat to their health, there are foreigners who are willing to run the risk, especially if they do not have young children.
The Chinese government launched a permanent residency program in 2004 but the number of green cards issued is low. The Center for China and Globalization reported that in 2012, “just 1,202 expatriates were granted permanent residency in China,” while in the same period more than 148,000 Chinese obtained overseas citizenship.
Of course, there is no need to replace each departing Chinese with a foreigner. But if China is a little more generous in granting residency and, ultimately, citizenship to foreigners, it will turn itself into a more cosmopolitan society, one that the rest of the world will more readily identify with and accept.
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