China’s worsening economic decline has large numbers of Chinese tycoons fleeing the country, a result of the West’s economic and political isolation of the communist regime, experts believe.
At least 10,000 Chinese high-net-worth Individuals (HNWI) are expected to emigrate abroad this year, taking with them an estimated $48 billion, according to Henley & Partners, a London-based investment immigration consulting firm, in a June 13 report
HNWI refers to people who have at least $1 million in liquid financial assets.
In an interview with The Epoch Time, Wang Jun, former director of the international department of Beijing based Unirule Institute of Economics, said that the main factor causing the outflow of Chinese tycoons would be the U.S. de-coupling from China, and the west isolating the Chinese Communist Party (CCP) due to its hegemonic rule and communist expansion.
“If you have hundreds of millions of dollars in assets, you will worry so much that you can’t sleep well. Why? Because the more you have, the greater the impact of outside movements on you, so those rich people might wonder if it’s possible to lose all their money soon,” said Wang, referring to the lack of security that HNWIs feel in China.
The exodus of wealth has accelerated over recent years. In 2017, approximately 10,000 wealthy Chinese emigrated abroad; in 2018, the number reached 15,000, an increase of 50 percent, according to Global Wealth Migration Review released by AfrAsia Bank in April 2019.
According to the International Migration 2020 Highlights released by the United Nations, China had one of the largest diasporas in 2020, with 10 million Chinese living outside of the country, and a large proportion of them wealthy immigrants.
U.S. President Joe Biden (R) gestures as he speaks with Indian Prime Minister Narendra Modi during a bilateral meeting in the Oval Office of the White House on Sept. 24, 2021 in Washington, DC. President Biden hosted a Quad Leaders Summit later that day with Prime Minister Modi, Australian Prime Minister Scott Morrison, and Japanese Prime Minister Suga Yoshihide. (Sarahbeth Maney-Pool/Getty Images)
A Raft of Western Chip Companies Leave China
On Sept. 24, 2021, the United States, Japan, Australia, and India held a “quadrilateral” summit, with the intention of allowing India to take over China’s position as a world manufacturing power.
The United States also led the establishment of the “Chip 4” Alliance. In this alliance, the strength of the United States is equipment and design, Korea’s strength is manufacturing and design, Japan’s is components and materials, and Taiwan’s is foundry and packaging. The quadruple alliance covers the areas of chip research, production, sales, and technology update, basically realizing the closed loop of chip production.
In response, major U.S. chip companies quickly withdrew from China. In January, U.S. semiconductor giant Micron Technology disbanded its R&D center in China and returned to the United States. In April, global automotive chip maker ON Semiconductor announced the closure of its global distribution hubs in Shanghai and relocation to Singapore. In May, Texas Instruments disbanded its MCU (Micro Control Unit) team at its Shanghai R&D center and relocated all its MCU product lines to India.
On May 15 to 16, the U.S.-EU Trade and Technology Council met to create new supply chains in key industrial sectors such as solar cells, rare earth, and chips, with a mutual effort that is “likely to impede China’s access to advanced technologies and erode its supply chain advantages,” South China Morning Post reported on May 17.
On August 9, President Biden officially signed The Chips Act of 2022, which prevents companies receiving subsidies from increasing investment in high-end chips in China for the next 10 years.
On August 12, the U.S. Department of Commerce announced new export controls on the EDA software needed to design GAAFET integrated circuits, a move that will undermine China’s ability to build cores.
Chinese Elites Leaving China
The escalating moves of the West are frustrating China’s high-tech executives, many of whom are looking to emigrate abroad with their assets.
Frequently, HNWIs share various information with each other about “Where is safer? Which country is better for their development?” Wang said.
One Chinese consideration is the actions of moguls in Russia. The country is one that is sanctioned by the West. Hence, Russia has lead the world in the emigration of millionaires over the past six months, and the number is expected to reach 15,000 in 2022, according to a survey by Henley & Partners.
Since Russia invaded Ukraine in February, and the West imposed sanctions on Russia, Russia’s consumer price index soared by 16.7 percent and the entire economy contracted between 10 and 15 percent, the New York Times reported on April 19.
Those who have sought foreign citizenship include such notable billionaires as Sun Hongbin, chairman of the board of directors of Sunac China with a worth of $70.71 billion, who has American citizenship; Shi Zhengrong, who started China’s photovoltaic industry, obtained Australian citizenship; and the former richest woman in Asia, Yang Huiyan, the head of Country Garden, immigrated to Cyprus in 2020, has a Cypriot passport known as the “Golden Passport.”
The Beijing Stock Exchange on Nov. 15, 2021 in Beijing, China. (Emmanuel Wong/Getty Images)
China’s Economic Outlook When it Loses Western Support
U.S.-China decoupling is a severe setback for China’s future economic outlook, as U.S. technology is a vital resource for China.
According to data by McKinsey Global Institute, China spent $29 billion on intellectual property imports in 2017, more than half of which were bought in the United States, Japan, and Germany, and 31 percent in the United States alone.
Over 40 years of diplomatic relations, there’s no doubt that the United States exported technology to China in a “one-way” manner, said Dong Jielin, a researcher at the China Institute for Science and Technology Policy at Tsinghua University.
Therefore, the impact on China of U.S. technology decoupling would be much more profound and serious than that of trade friction, Dong told The Financial Times in June 2019.
In addition, the CCP sided with Russia in the Russia-Ukraine war, which makes the Western democratic camp more distinct from the Chinese and Russian dictatorships.
The Institute for Economic Research (Ifo), one of the largest economic research institutes in Germany, released a research report on August 8, indicating that if the West were to disconnect from China, China’s GDP would drop by as much as 2.27 percent.
The study also implies that the trend of the U.S. and China uncoupling will be the uncoupling between Western democracies and authoritarian powers.
“It is absolutely inevitable that the two powers will conflict,” Wang said, citing that the U.S. Department of Defense reaffirmed that the CCP is the “most consequential strategic competitor” in a 2022 National Defense Fact Sheet (pdf).
In this case, the outflow of brain and wealth in China would not end in the short term, and as a vicious cycle, “entrepreneurs are the main body of economic development, and the migration of a large number of entrepreneurs will not only cause the loss of wealth in China , and will affect the sustainable development of China’s economy,” warned Zhong Yongnian, director of the East Asian Institute, the National University of Singapore, in 2011 at a think tank summit, reported China News Network.
Jenny Li has contributed to The Epoch Times since 2010. She has reported on Chinese politics, economics, human rights issues, and U.S.-China relations. She has extensively interviewed Chinese scholars, economists, lawyers, and rights activists in China and overseas.
