President Xi Jinping’s decision to dismantle COVID travel restrictions is accelerating an exodus by wealthy Chinese, who could fuel billions in capital outflows as they plow cash into property and assets abroad.
Since the end of COVID zero in December, many rich Chinese have begun travelling overseas to check out real estate or firm up plans to emigrate, immigration consultants said in interviews. That’s threatening a brain drain in the world’s second-largest economy as well as outflows that could pressure its financial markets.Bloomberg
Before the pandemic, China faced capital flight of about $US150 billion annually from people going overseas, but the amount is likely to be higher in 2023 since they haven’t be able to travel for the last three years, according to Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis SA. Her calculation — worked out by looking at unexplained differentials in global tourism data — is an estimate of funds left abroad permanently by Chinese nationals who travel.
Juwai IQI, a real-estate firm that helps sell international property to customers in Asia, said the number of mainland Chinese buyer inquiries dropped 26 per cent in 2021 and fell 11 per cent in 2022, but it’s gone up 55 per cent in 2023 so far and stayed at that level.
JPMorgan Chase & Co. and Julius Baer Group are among banks that have staffed desks in other locations, such as the San Francisco Bay area and Zurich respectively, with Mandarin speakers, according to people familiar with the matter. A spokeswoman for Julius Baer confirmed that the bank has Mandarin speakers as part of its team in Switzerland serving Asia-Pacific wealthy clients. JPMorgan declined to comment.
A lot of her colleagues and friends have either emigrated or are actively exploring that option, she said, with many losing confidence in the country’s future. “If several million people go out and travel this year, that may still amount to tens of billions of dollars of downward pressure on the foreign exchange reserves that China has,” said Chen Zhiwu, chair professor of finance at Hong Kong University.
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