According to a report released on June 20, 2017 by the China Merchants Bank and Bain & Company, the number of wealthy people in China increased nearly 9-fold in the past 10 years, with 70 percent accumulating their wealth within a 5-year period.
The analysis indicated that the surge in the number of wealthy people has given rise to two social ills: 1) societal unrest caused by income inequality, and 2) a steady drain of talent and wealth due to the migration of the wealthy seeking a safer living environment.
The ultimate cause of China’s economic inequality is crony capitalism created by the combination of its political and wealth distribution systems whereby government officials are allowed to conduct personal business using their positions.
The insecurity of the wealthy is driving an upsurge of migration
The divide between the rich and the poor not only is creating social turmoil, it is also driving a large wave of emigration, resulting in a loss of talent and wealth. According to a recent media report, China’s emerging middle class is migrating overseas due to concerns about security, protection of wealth, education, food safety, high property prices, and environmental pollution.
According to the Blue Book of Global Talent – Annual report on Chinese International Migration published by Center for China and Globalization, over the past five years, approximately 150,000 Chinese nationals have obtained permanent residency annually in foreign countries, including the United States, Canada, Australia, New Zealand, and Singapore.
During a recent visit to the United States, political analyst Chen Po Kong commented that the emerging middle class in China profited from early reforms that were considered essential to maintaining the one-party system. However, laws and regulations have not kept pace with China’s high rate of economic growth, undermining the interests of the middle class.
Escaping the adverse health effects of pollution also motivates the rich to leave China. The Chinese travel site Ctrip reported that approximately 150,000 Chinese tourists traveled abroad to escape severe urban air pollution in December 2016, and more than 1 million travel abroad annually for the same reason.
The China Private Wealth Report 2017 revealed that wealth protection is a common goal of the wealthy. Most of China’s wealthiest people stressed that their top priorities are “wealth preservation” and “wealth inheritance.” In a 2009 survey, more than half of high networth Chinese considered “wealth creation” or “quality of life” their primary concerns.
Additionally, Hong Kong, the United States, Australia, Canada, and Singapore emerged as the top five investment destinations for wealthy Chinese. Respondents said that the three main reasons for their overseas investments are to diversify investment risk, capture market opportunities, and migration.
Translated by Chua BC and edited by Angela.