Date: Wednesday, 09-November-2011
November 4, 2011 1:55 pm
By Jamil Anderlini in Beijing and Patti Waldmeir in Shanghai
The gaudy, gold-lacquered ballroom of the Legendale Hotel in downtown Beijing was filled to bursting on Friday morning with a sample of China’s wealthy elite, all there with the intention of shifting some of their money abroad.
Prospective buyers of French chateaux, Caribbean islands and Manhattan penthouse suites rubbed shoulders with immaculately suited European sales people flown in to sell China’s nouveau riche a comfortable offshore refuge or two.
“The primary motivation for Chinese buyers is to export wealth out of the country, it’s not a financial decision at all,” according to George Varvitsiotis, managing director of Propgoluxury.com, a luxury real estate web portal with a stall at the event. “They prefer luxury properties because they can transfer large amounts in one go.” He says this trend only began a couple of years ago and has accelerated rapidly.
But it’s not just assets that the wealthy want to move offshore. About 60 per cent of rich Chinese people have already begun the process of emigrating or are considering doing so, according to a survey of people with more than Rmb10m ($1.6m) in personal wealth, released this week by Bank of China and rich list publisher Hurun Report.
The results echo those of an earlier survey by Bain & Co, while anecdotal evidence suggests the number looking to leave China permanently or at least secure foreign citizenship has spiked in the last year or so.
According to the studies, a key complaint is the deteriorating quality of life in China’s burgeoning urban metropolises, where traffic and pollution get worse by the day and social services remain inadequate and sclerotic.
Poor governance and institutionalised corruption mean serious food safety scandals emerge with depressing frequency, while patients are forced to bribe doctors just to get regular treatment.
“When it comes to food safety and the environment, things just get worse and worse,” says Ms Zhu, a representative of an overseas university in Beijing, who declined to give her full name. “Nine out of ten of my friends complain that they have to bribe their children’s teachers or schools in order to get proper or better education”.
These problems are driving those who can afford it to consider moving to western countries, which offer a far better quality of life, thanks partly to the certainty that comes with transparent and participatory legal and political systems.
The shift in sentiment is apparent even among the country’s real elite – the senior Communist party officials, billionaires and powerful political families that have been the chief beneficiaries of China’s impressive rise.
“You can feel the anxiety of the ultra-wealthy and even of the political elite. They feel there’s no security for their wealth or possessions and that their assets could be taken away at any time,” says Hung Huang, a publishing and fashion mogul. “Nobody feels protected against the system any more.”
For more liberal reformers in the Party, this insecurity stems from the failure to establish a credible, independent legal system or launch any meaningful reforms to make the political system more accountable.
Meanwhile, others lament the rise of “populism”, a word that is used to describe Beijing’s reactive policy responses to increasing outbursts of dissatisfaction in the streets and on the internet.
The response from more hard-line Communist party leaders has been to expand and mobilise the formidable domestic security apparatus and emphasise “stability maintenance” above all else.
In private conversations, many of the people who supposedly make up the ruling elite of China express serious misgivings about the direction and future stability of the country, while admitting that they feel largely powerless to affect meaningful change.
“There is a sense that we are approaching an inevitable breaking point, when the pressures in society will boil over and consume the rulers,” says one Chinese banker with close ties to a number of powerful political families.
“Almost all of the elements are in place for an uprising like we saw in 1989 – corruption is worse today than it was then, people feel they can’t get ahead without political connections, the wealth gap is much bigger and growing and there has been virtually no political reform at all. The only missing ingredient now is a domestic economic crisis.”