They may have made their millions in China, but for many of the country’s new rich, the West is still best.

And soon they’ll be counting in U.S. dollars

 

About 60% of China’s rich – those with at least 10 million yuan (about US$1.5 million) to invest – have either emigrated or are thinking of investing abroad in order to emigrate, says a report issued recently.

The 2011 Private Wealth Report, published by China Merchants Bank and business consulting firm Bain & Company, showed that the number of high net worth individuals in China exceeded 500,000 in 2010, with an average of 30 million yuan of capital.

The number is expected to reach 585,000 this year, nearly doubling 2008 figures.

The United States, Canada and Australia, with their investment immigration schemes, are popular destinations for rich Chinese. The main reasons cited for moving are children’s education and retirement.

Only 6% of respondents considering emigrating said high taxes was a factor.

Investment immigration, in fact, has become a trend in China, says the report, highlighting a 73% compound annual growth rate of those who used investments to move to the U.S. in the past five years. Zhong Dajun, director of the Beijing Dajun Institute for Economic Observation, told Global Times that investment immigration of rich Chinese is a wealth drain that needs to be stopped.

We have been working hard to develop the economy in the past 30 years, but now these elite members of the society are fleeing with the majority of the wealth.

“We have been working hard to develop the economy in the past 30 years, but now these elite members of the society are fleeing with the majority of the wealth.

“The loss may be even higher than all the foreign investment we have attracted. It is as if, when the time of harvest comes, we find the fruits have all gone to others’ baskets,” Zhong said.

“Did the pigs get so fat that they are afraid of being slaughtered, and so transferring their wealth? Or are they finding environmental pollution so bad that they can't bear to stay, or do they sense that China's decline is imminent, meaning they're hedging their bets on the coming of ‘The Great Escape from China’?” an enraged Chinese netizen was quoted as saying.

It’s true that many of China's rich amassed their wealth in the early years of the country's opening-up during the 1980s, when monitoring systems and regulations were lax, if non-existent. Many now fear they may face hefty fines or even confiscation of their assets if the source of their wealth is uncovered. And so they stash their money abroad.

Also driving the emigration is an acute sense of insecurity among the rich as they face mounting social hostility, amid rampant income inequality. About 21.5 million of China’s rural population still live on less than $90 per year, with a further 35.5 million living below the official "low income" line (approximately $125 per year).