The Chinese Exodus – Part 2

8.22.2016 | The Chinese Exodus – Part 2 – Tweed Economics
The History of Chinese Emigration

Ever since the period of the great emperors, the Chinese have traveled overseas in pursuit of fortune, knowledge and adventure. Sailing junks took merchants to Manila to trade silk and porcelain for silver. The largest previous emigration though, known as the Chinese diaspora, was seen from the 19th century to 1949 and was largely the result of wars and starvation in mainland China. The majority of immigrants leaving were peasants and manual labourers, described as “coolies’ (literally: “Hard Labor”) who emigrated to work in the mines and plantations of the Americas, Australia, Southeast Asia and South Africa.

However, through much of China’s history, immigration has been limited by strict controls preventing large groups leaving the country. In the 1980s more liberalized emigration policies were enacted, leading at first to more students and scholars departing to study at foreign universities; a flow that has steadily increased in recent years. The number of wealthy mainlanders has grown 23% yearly even while the country’s economy slows down. Despite their wealth, large scores of Chinese nationals continue to leave the country for overseas homes.

8.22.2016 | The Chinese Exodus – Part 2 - Tweed Economics

Where are the most popular destinations?

In Australia, one of the most popular destinations for Chinese tourists, emigrants and students, Mandarin Chinese is now the second-most widely spoken language after English. Australia is the first most visited tourist destination by China’s high net-worth individuals, followed by France, then Dubai, Switzerland and the Maldives.

In terms of those who want to emigrate, according to the South China Morning Post, Hong Kong is the most important global city, while the U.S. is the preferred destination because for a variety of reasons. In part because of its property market, medical services and friendly immigration policy, and also because it is home to most of the world’s top universities. Britain comes second, and Canada third.

Canada dismantled its controversial investor visa scheme in 2014, which in part accounts for the drop in numbers of new immigrants from China. In the US In 2015, under the EB-5 program, the government issued 6,895 visas to Chinese nationals. The EB-5 program allows foreigners to live in the U.S. as long as they invest $500,000 or above.

References:

http://www.wsj.com/articles/the-great-chinese-exodus-1408120906

http://www.independent.co.uk/news/world/asia/china-s-millionaire-exodus-as-wealthy-flee-with-america-the-preferred-destination-9069551.html

http://www.ca-soc.org/wpmu284a/documents/

http://www.scmp.com/news/china/money-wealth/article/1884376/number-rich-chinese-grows-23-cent-and-many-want-emigrate

http://www.scmp.com/news/china/economy/article/1877180/whatever-happened-sharing-wealth-chinas-fast-growing-group

http://www.cnbc.com/2015/09/02/amid-turmoil-wealthy-chinese-eyeing-the-us.html

 

The Chinese Exodus – Part 1

8.20.2016 | The Chinese Exodus – Part 1 – Tweed Economics

The Chinese Exodus – Part 1

The Wall Street Journal drew attention to the Chinese exodus earlier this week in a long essay on “The Great Chinese Exodus”, a phenomenon, which has also been widely reported elsewhere over the last few years. A recent report by WealthInsight found that the Chinese wealthy have $658 billion overseas.

Chinese nationals are leaving China “in vast waves”. Over 100 million Chinese citizens left the country last year, mostly for tourism; but increasing numbers of students and the wealthy are also leaving, not to return. In a recent survey compiled by Shanghai research firm Hurun Report, it was noted that 64% of China’s wealthy (designated as those with assets of over $1.6 million) are emigrating or intend to do so. Surprising news given the fact that the exodus is occurring as China is becoming a world power.

Today, mainland China has the largest number of billionaires – the Harun Report counted 596 last year compared to 537 in the U.S. Bruno Lannes, partner at Bain & Co management consultancy told the South China Morning Post that this was in general good news for the world as it meant China would continue to help drive the global economy.

Lannes commented, “The world economy today is much more integrated than it was a few years ago,” he said. “When China is doing well, the rest of the world also feels better, because China is importing their products, the middle classes want their products, the billionaires want more holidays, more luxury … All this helps the global economy.”

chinese exodus part 1

What are the factors behind the exodus?

Why are the wealthy Chinese leaving their own country? On the positive side, a comfortable lifestyle along with a strong investment environment can be found outside mainland China for relatively affordable prices in attractive areas such as California or Australia’s Gold Coast, both of which have seen increasing numbers of Chinese immigrants in recent years.

Many of those leaving expressed their perception of a foreign passport as being simply an insurance policy in case things go wrong at home. Ms. Sun, a 34-year-old Beijing resident interviewed by the WSJ said “I’m just giving my family another option”.

Factors causing the exodus from the homeland include the fact that China’s urban population is afflicted by a number of challenging issues, including chronic pollution and an underdeveloped education system that heavily relies on testing. There is also a sense of political uncertainty, which is not widely reported on. However, according to the WSJ, President Xi Jinping’s premiership has “created as much anxiety as hope”.

The Chinese are also splitting their time between their homeland and overseas destinations as they make investments in other countries. The Financial Times released a study last year in which 42% of the wealthy Chinese cited the U.S. as their top destination for their investments. Volatile stock markets and the slowing Chinese economy have led to a surge in interest from the overseas Chinese in U.S. investment opportunities, particularly real estate.

References:

http://www.wsj.com/articles/the-great-chinese-exodus-1408120906

http://www.independent.co.uk/news/world/asia/china-s-millionaire-exodus-as-wealthy-flee-with-america-the-preferred-destination-9069551.html

http://www.ca-soc.org/wpmu284a/documents/

http://www.scmp.com/news/china/money-wealth/article/1884376/number-rich-chinese-grows-23-cent-and-many-want-emigrate

http://www.scmp.com/news/china/economy/article/1877180/whatever-happened-sharing-wealth-chinas-fast-growing-group

http://www.cnbc.com/2015/09/02/amid-turmoil-wealthy-chinese-eyeing-the-us.html