Jayack ma, founder The logo of e-commerce giant Alibaba is a symbol of how the ruling Communist Party devalues the wealthy. In 2020, he dared to publicly criticize financial regulators. Soon after, they soared through the $37 billion initial public offering of Alibaba’s fintech subsidiary Ant Group and investigated Alibaba itself for monopolistic practices. The honed Ma has largely disappeared from public life. At the end of 2021, he left China to spend his time studying agriculture and sustainable food production.
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But after an absence of more than a year, Jack returned. On March 27, photos of him visiting a school in his hometown of Hangzhou emerged. He was reportedly persuaded to return by China’s new premier, Li Qiang. Li Keqiang is trying to reassure wealthy private entrepreneurs that they are still valued by the party even though they should know their place.
Wealthy Chinese need reassurance. China’s draconian controls to stem the spread of covid-19 ended only a few months ago after three years of business disruption and a brutal lockdown of Shanghai, where many wealthy Chinese live. Regulatory crackdowns have decimated once-thriving industries like private education. Officials strongly opposed “money worship” and made tax-evading celebrities kneel and beg for mercy. Government plans to narrow the gap between rich and poor are now on hold, but some fear they will face greater pressure to donate. On top of that, China’s rich fear that they could get caught up in sanctions if friction between the US and China increases.
capital panic
Faced with such a headache, many people have been wanting to leave. It was tough in 2020-21 when covid control measures hit immigration. But in 2022 some 10,800 high-net-worth individuals with an average wealth of $6m will leave the country, with flows accelerating towards the end of the year as covid controls ease. That’s according to data compiled by firms Henley & Partners and New World Wealth, which track the movement of the wealthy. Andrew Amoils of New World Wealth said more people were expected to leave in 2023.
Flying is easy, transferring wealth is much harder. In theory, Chinese citizens can only take US$50,000 out of the country each year. But there are many ways to circumvent the controls, from visiting shady Hong Kong currency exchanges to setting up overseas companies to employ family members. A decade ago, U.S. border officials picked up Chinese nationals carrying cash in suitcases at airports. Recently, billions of dollars have left the country in cryptocurrencies.
Traditionally, Chinese nationals wished to purchase real estate and other assets in Canada, the United States or the United Kingdom. In recent years, Singapore has been favored. The city-state is a top destination for Chinese billionaires considering emigrating, according to wealth-tracking firm Hurun. Singapore has low taxes, good schools, a thriving wealth management industry and deep cultural ties to China. Many people there can speak Mandarin. Its political stability is also a boon for those wary of the roller-coaster ride of American and British politics.
The new arrivals have pushed up prices, increasing demand for luxury cars and high-end products Liquor, Chinese spirit. But the clearest sign of wealth shifting to Singapore is the growing number of Chinese family offices – private companies that manage family assets. The number of such offices rose from 33 in 2019 to 347 in April 2022, according to Singapore’s central bank. By the end of 2022, there may be as many as 750 Chinese family offices registered in Singapore, accounting for about half of the global family offices. Kia Meng Loh, a senior partner at law firm Dentons Rodyk, estimated the total. He expects more people to sign up this year.
All of this suggests that, despite Ma’s return to China, the premier’s efforts to lure the wealthy still have a long way to go. Clumsy messaging held him back, too. A provincial government recently said businessmen suspected of crimes “should not be arrested unless absolutely necessary”. Similar claims have been made for years.
The disappearance of another billionaire didn’t help either. On February 16, a Chinese investment bank reported that its founder Bao Fan could no longer be reached. Ten days later, the company said he was cooperating with authorities in the investigation. As it turns out, Mr. Bao also saw value in moving assets outside of China. In the months leading up to his disappearance, he was said to be setting up a family office – in Singapore, of course. ■
Correction (April 6, 2023): A previous version of this story incorrectly referred to Henley & Partners. sorry.
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