China’s rich are fleeing the country at an increasing rate, transferring large amounts of their assets abroad to avoid being targeted by the Chinese Communist Party (CCP) amid the economic slowdown.
‘Economic Situation Is Quite Bad’
Mike Sun, a U.S.-based investment strategist and China expert, told The Epoch Times: “I don’t have confidence in him [Xi Jinping]. The Chinese people generally lack confidence [in China’s leadership], resulting in people just wanting to leave the country.”Mr. Sun said that only the CCP is currently making massive investments; the regime is still spending on big infrastructure projects, but the private sector is stagnant. He said there is a significant lack of confidence from private investors, and wealthy individuals are seeking to move their assets overseas instead of investing in domestic markets.
“Many of my friends in China now want to leave. ... However, one of the major challenges that they face is that they can’t get their money out of the country. This greatly limits how people can leave China.”
Sneaking Cash Out of China
On Nov. 28, a New York Times article claimed that China’s wealthy have transferred hundreds of billions of dollars out of the country this year, directing funds toward foreign currencies, gold bullion, and real estate in overseas markets.The wealthy Chinese use tourism as an excuse to bring massive amounts of cash overseas, according to Mr. Sun, as the CCP strictly prohibits direct capital investments overseas. Essentially, Chinese individuals are allowed to take money out of the country for traveling and studying abroad but not for buying stocks, bonds, or real estate. Thus, to purchase property overseas, people found ways to circumvent state controls to transfer their funds out of China.
However, Mr. Sun said the CCP is targeting China’s underground banking system to prevent an outflow of foreign currency.
“Macau used to be a hub for money laundering and underground banking, but now this route has been blocked,” he said.
“When I asked a few friends in the business sector about how their money got out of China via Macau, the consensus was that it was all smuggled out. Cash was transported on speedboats to Macau and some third country in Southeast Asia. From there, the money was transferred to countries like Japan via legitimate means,” Mr. Sun said.
Another method of moving money under the CCP’s radar is through import and export companies. These companies deliberately inflate the prices of their products during transactions with China and collaborate with international partners to funnel funds overseas through the company accounts.
The less sophisticated method involves physically carrying cash out of China in a suitcase, as the Chinese yuan can be exchanged for U.S. dollars in Southeast Asia and the United States.
Meng Jun, a Chinese entrepreneur now living in exile in the United States, told The Epoch Times that some luxury real estate transactions in Southern California have been conducted using Chinese currency.
China’s Capital Outflow
China is experiencing the largest capital flight in years. Nikkei Asia revealed data from China’s State Administration of Foreign Exchange in September showing a net capital outflow of $53.9 billion, the largest since January 2016, when it was $55.8 billion due to the depreciation of the Chinese yuan.‘CCP Is Running Out of Money’
Mr. Meng said the CCP is now trying to purge China’s rich of their wealth. “The CCP is running out of money, so it resorted to looting the wealthy individuals in China. This has been going on for a while; it is happening openly and blatantly now. The regime is desperately trying to extort money from people through so-called tax audits and capital control.”“Ultimately, the wealthy will rush to sell their assets and transfer their money overseas via whatever means. Many will leave China for their safety. If they wait any longer, they may not even be permitted to leave the country. Therefore, we must have a clear understanding of the CCP’s actions,” Mr. Meng said.
