On December 14, 2022, Reuters reported the increase in air and road traffic in China after the end of the restrictions established by the Covid zero policy. That same day, Roman Kramarchuk, an analyst at S&P Global, stated that this change was essential to understand what the development of the markets would be in 2023.
It is clear that the end of the zero Covid policy is having numerous consequences, the most serious being the increase in infections in the country. On the other hand, Bloomberg has recently reported another consequence contrary to the interests of Beijing: the increase of wealthy people who are planning to leave China.
The rich leave. Before the pandemic, the Asian giant had an estimated capital flight of 150 billion dollars a year from people leaving the country, and in 2023 it will be higher due to the end of restrictions on travel outside of China, according to Alicia García Herrero, Natixis Economist.
Herrero explains that this capital flight will increase the pressure on the renminbi, the legal Chinese currency whose basic unit is the yuan. That would affect labor, productivity and growth, he says.
State control, one of the reasons. The decision to leave China is due to several factors, mainly the increase in control measures in economic sectors such as technology, and the increase in power by Xi Jinping after the 20th Congress of the Chinese Communist Party held in October 2022. Both elements have generated a lot of concern among many upper-class people and their outpouring could affect the national financial market.
Canadian option. On the other hand, this migratory phenomenon already occurred last year, when 10,800 rich people left China, being the second country, after Russia, where the largest exodus of wealthy people took place, according to data from New World Weather. In this sense, Feruza Djamalova, a lawyer from the Canadian law firm Sobirovs, acknowledged in conversations with Bloomberg that since the summer they have seen an increase in inquiries from wealthy Chinese clients who want to settle in Canada as soon as possible.
New Zealand, another destination. At the same time, the New Zealand immigration consultancy Express Immigration has also detected an increase in inquiries from Chinese clients, most of whom belong to the financial sector, to settle in New Zealand. Peter Luo, a consultant to the firm, acknowledges that most of the requests they receive are of an urgent nature.
Hong Kong is not what it used to be. On the other hand, as reported by CNBC in March 2022, since the protests in Hong Kong began four years ago, many wealthy Chinese began to look for other places to deposit their fortunes, despite the fact that Hong Kong has very strict tax and tax laws. lax, placing it as the fourth country with the highest opacity index in its financial jurisdiction, behind Singapore, Switzerland and the United States, according to the Financial Secrecy Index prepared by The Tax Cast.
The rich go to Singapore. The threat of Beijing’s control of Hong Kong, therefore, caused many wealthy Chinese to start looking for alternatives to deposit their fortunes, a decision that other wealthy individuals are now making. One of those places is Singapore: according to a report by the OrangeTee & Tie agency, purchases of luxury apartments by buyers located in China increased by 42% in the first eight months of 2022.
Affluent and restless class. It seems, therefore, that concern is spreading among China’s wealthy class, even among the 32,700 individuals who have a fortune of more than 50 million dollars, making the Asian giant the second country in the world with the most super-rich, surpassed only by the United States, with around 140,000, according to the Global Wealth Report prepared by Credit Suisse Group.
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