Wealthy Chinese are pulling the trigger on exit plans from their homeland as pessimism grows about the future of the world’s second-largest economy under Xi Jinping and the ruling Chinese Communist Party.
This weekend, Xi cemented his position as the most powerful leader since Mao Zedong, remaining at the helm of the Chinese Communist Party and its powerful Central Military Commission for another five years. After the CCP’s five-year congress, the 69-year-old now has an unshakable hold on power and the potential to rule for the rest of his life.
David Lesperance, a Europe-based lawyer who has worked with wealthy families in Hong Kong and China, said Xi extending his rule beyond two terms is a tipping point for China’s business elite, which has thrived for decades as the Chinese economy boomed.
“Now that ‘the president’ is in place. . . I have already received three ‘procedure’ instructions from various very wealthy Chinese business families to execute their fire escape plans,” Lesperance said.
In the months preceding the congress, there had been speculation that Xi was under pressure inside the 97 million-member CCP to steer clear of controversial policies, including its zero-Covid checks, support for Vladimir Putin and the reassertion of party control in the business landscape.
However, Kia Meng Loh, a Singapore-based senior partner at Dentons Rodyk, a global law firm with 6,000 employees in China, said inquiries and instructions for setting up “family offices— private entities used to manage a family’s estate — had also been building in the city-state “for months.”
“Clients I work with have seen [Xi’s] third term as a foregone conclusion much earlier than this week,” Loh said.
He added that Hong Kong, long a favored destination for Chinese wealth and elite families, had become less attractive as Beijing increased control over the territory.
The number of family offices in Singapore quintupled between 2017 and 2019, and nearly doubled from 400 at the end of 2020 to 700 a year later, according to Citi Private Bank.
Ryan Lin, director of Singapore-based Bayfront Law, said he was approached by five families at the Chinese Party Congress last week to set up a family office in Singapore, three of which are in the works.
Lin, who has set up around 30 family offices in Singapore over the past year, said most Chinese hope to settle there, as well as transfer their money.
Lesperance said many of his clients have spent years preparing to leave China, legally moving capital to safe offshore jurisdictions, and arranging alternative residencies and new citizenships outside of China for their families.
China’s wealthy, he said, are not only worried about rumors of an official wealth tax that would replace informal “common prosperity” donations. They are also increasingly concerned about their personal safetyeven after they are gone.
These fears have deepened following a series of temporary or longer-term disappearances of well-known public figures in recent years, including the founder of Alibaba. Jack Matennis star Peng Shuaifinancial elite Xiao Jianhua and real estate magnate Whitney Duan.
“The family motto has always been: ‘Keep a fast junk in port with gold bars and a second set of papers’. The modern equivalent would be a private jet, a few passports and foreign bank accounts,” says Lesperance. “It’s the world we’re in . . . it’s a tough thing.
Others, however, seem less well prepared.
The founder of a US real estate platform for wealthy Chinese said he was struggling to deal with the flood of inquiries because most clients were in a hurry to leave the country and had not planned carefully.
Meanwhile, immigration firms in Shanghai and Beijing have reported an increase in applications for US green cards for people with “extraordinary abilities”, as the wait time is lower than for green cards based on immigration. investment often used by the ultra-rich.
Additional reporting by Sun Yu and Eleanor Olcott